\u3000\u3 Shengda Resources Co.Ltd(000603) 613 Beijing United Information Technology Co.Ltd(603613) )
Key investment points
Event: on April 21, 2022, the League of Nations released the first quarterly report of 2022. In 2022q1, the company achieved revenue of RMB 12.138 billion, a year-on-year increase of + 99.8%; The net profit attributable to the parent company was 155 million yuan, a year-on-year increase of + 98.9%; After deducting government subsidies, profits and losses of entrusting others to invest or manage assets, the non net profit deducted was 145 million yuan, a year-on-year increase of + 90.2%. The company’s 2022q1 revenue is close to the upper limit of the forecast, the net profit attributable to the parent exceeds the upper limit of the forecast, and the deduction of non net profit is located in the performance forecast center.
The cost side continues to be optimized and the net profit margin of sales remains stable: with the rapid growth and proportion increase of new platforms and new categories with low gross profit margin, the gross profit margin of the company decreases slightly. The gross profit margin in 2022q1 is 3.02%, year-on-year -0.3pct. In the future, with the improvement of the bargaining power of these new platforms, the gross profit margin is expected to improve. In 2022q1, the company’s expense rate continued to optimize, with the sales expense rate of 0.59%, a year-on-year -0.32pct, which enabled the company to maintain the stability of the net profit margin despite the decline of the gross profit margin. In 2022q1, the company’s net profit margin on sales was 1.55%, with a year-on-year increase of -0.01pct.
Operating cash flow improved significantly on a month on month basis: in 2022q1, the company’s net cash flow from operating activities was RMB 111million, a year-on-year increase of +7.3%, which was significantly improved from RMB -386million in 2021q4. Previously, the company increased more prepayments to ensure the supply of goods, and due to the influence of dual control factors and the company’s phased customer support strategy, the operating cash flow of 2021q4 decreased significantly. In 2022q1, the company’s prepayment decreased compared with the beginning of the year, and the operating cash flow also improved.
The overall penetration rate of e-commerce of industrial products is not high, and there is much to be done in the future: according to the company’s calculation, the penetration rate of the company’s self operated e-commerce at the end of 2021 is only 1.02%, of which, except Tu Duoduo and Bo Duoduo (the penetration rate is 2.09% / 1.09%), the penetration rate of other “Duoduo” platforms in corresponding industries is less than 1%. Industrial products trading is a very large track. At present, it is in the high-speed growth stage of climbing penetration. The company’s industrial products e-commerce business has the potential of horizontal replication and vertical deep excavation. It is expected to achieve sustained high growth by broadening users and increasing customer unit price.
Profit forecast and investment rating: we are optimistic about the continuous improvement of e-commerce penetration of industrial products and the company’s long-term growth potential. Under the expectation of 2q1, the net profit of the parent company is very high. Out of careful consideration of the follow-up impact of the epidemic, we still maintain the prediction of the company’s net profit attributable to the parent company from 2022 to 2024 as 970 / 1560 / 2.48 billion yuan, with a year-on-year increase of 67% / 62% / 59%. The corresponding P / E of the closing price on April 21 was 36x / 22x / 14x, maintaining the “buy” rating.
Risk tips: the price of industrial products fluctuates, the development of the new platform is less than expected, the loss of users, the risk of customer default, the intensification of industry competition, etc
