\u3000\u3 Shengda Resources Co.Ltd(000603) 605 Proya Cosmetics Co.Ltd(603605) )
The company released its 2021 annual report and the first quarterly report of 2022: in 2021, the company realized an operating revenue of 4.633 billion yuan / + 23.47%, a net profit attributable to the parent of 676 million yuan / + 21.03%, a non net profit attributable to the parent of 568 million yuan / + 20.89%, and a non recurring profit and loss of 8.03 million yuan, mainly from government subsidies. The net operating cash flow is 830 million yuan / + 150.24%, and the basic earnings per share is 2.87 yuan / + 51.56%. In Q1 2022, the revenue was 1.254 billion yuan / + 38.53%; The net profit attributable to the parent company is 158 million yuan / + 44.16%, and the non net profit attributable to the parent company is 147 million yuan / + 36.21%. The company’s target revenue and net profit in 2022 increased by more than 20% year-on-year.
The essence of the strategy is continuous, and the proportion of online direct investment continues to rise. The company continues to adhere to the strategy of large single product, among which the essence of Proya Cosmetics Co.Ltd(603605) brand is the ruby essence, the double resistance essence and so on. The large single products account for more than 25% of the total sales of the brand, and the Tmall platform is more than 60%. In 2021, the company achieved 3 billion 224 million yuan /49.54% of online revenue, accounting for 84.93% of total revenue. Online tiktok and Tmall were also investing in new channels such as jitter. Among them, the company achieved remarkable results in “tmall double 11”, during which Proya Cosmetics Co.Ltd(603605) brand tmall flagship store realized gmv6 RMB 900 million, with a growth rate of more than 120%, becoming the top 15 of tmall beauty brand and nearly 80 million of Caitang brand Gmv, with a growth rate of more than 200%. The tiktok platform is mainly self broadcasting, and it becomes another channel power of the company. The offline revenue was RMB 696million / -38.03%, accounting for 15.07% of the total revenue, which was caused by the internal initiative to reduce long tail outlets, de stocking and the reduction of passenger flow caused by external epidemic.
The gross profit margin increased and the sales expense ratio tended to be stable: in 2021, the company achieved a gross profit margin of 66.46% / + 2.91 PCTs and a gross profit margin of 67.57% / + 3.16 PCTs in 22q1, which was caused by the increase in the proportion of high gross profit categories, the increase in the proportion of online direct sales and the prominent position of Proya Cosmetics Co.Ltd(603605) and other high gross profit main brands under the large single product strategy. In terms of rates, in 2021, the sales expense rate is 42.98% / + 3.08pcts, the management expense rate is 5.12% / – 0.32pct, and the R & D expense rate is 1.65% / + 0.27pct. The sales expense rate is increased due to the increase of image publicity and promotion expenses required for the incubation of new brands; The rate of administrative expenses is basically the same; The R & D expense rate has decreased, but R & D is more accurate and effective. 22q1 single quarter sales rate was 42.37% / + 0.65pcts, management expense rate was 5.16% / – 0.62pct, R & D expense rate was 2.39% / + 0.44pct, sales expense rate decreased steadily, and R & D expense rate increased.
Substantial increase in cash flow and improvement in operating capacity: the net operating cash flow of the company in 2021 was 830 million yuan / + 150.24%, mainly due to the year-on-year increase in sales revenue and the de inventory and de credit of offline channels; The turnover days of accounts receivable decreased from 7 days to 16.45 days, which was caused by the company’s reduction in credit support of offline dealers; The turnover days of inventory receivable increased by 3 days to 106.19 days. The net operating cash flow of 22q1 in a single quarter was 342 million yuan / + 521.66%, the turnover days of accounts receivable decreased by 14 days to 10.37 days, and the turnover days of inventory decreased by 27 days to 96.77 days, which proved that 22q1 company had a comprehensive positive cash flow and operating capacity.
Investment suggestion: the construction of brand matrix has been improved, the overweight of new channels is expected to increase, and the organizational reform has been continuously promoted to adapt to market changes. ① In 2021, the strategy of large single product has achieved remarkable results, the effectiveness of ruby and double anti series has been verified, the cosmetics brand has made rapid progress, and will launch high-end brands to expand the user group; 2. Tiktok tiktok and other live broadcasting platforms, focusing on meticulous operation of direct channel, rapid growth of new channels such as vibro store. ③ The construction of grid organization structure is completed, the construction of digital middle office team continues to be promoted, and the organization structure continues to evolve, which is expected to better adapt to market changes. It is estimated that the performance growth rate of the company from 2022 to 2024 will be 38% / 35% / 40%, and the corresponding P / E will be 46 / 34 / 24x.
Risk tip: covid-19 epidemic continues to deteriorate, dealer management risk, channel structure risk and new brand incubation risk.
