\u3000\u3 Shengda Resources Co.Ltd(000603) 816 Jason Furniture (Hangzhou) Co.Ltd(603816) )
Event: the company released the annual report of 2021 and the first quarterly report of 2022, and achieved an operating revenue of 18.342 billion yuan in 2021, a year-on-year increase of + 44.81%; The net profit attributable to the parent company was 1.664 billion yuan, a year-on-year increase of 96.87%, and the net profit attributable to the parent company after deducting non profits was 1.427 billion yuan, a year-on-year increase of 141.55%. In 2022, Q1 achieved an operating revenue of 4.54 billion yuan, a year-on-year increase of + 20.05%; The net profit attributable to the parent company was 443 million yuan, a year-on-year increase of + 15.11%, and the net profit attributable to the parent company after deduction was 382 million yuan, a year-on-year increase of + 20.3%.
Comments:
The effect of category integration was initially shown, and the business performance of Q1 in 22 years exceeded expectations. In 2021, the company achieved beautiful growth in many categories, and the effect of category integration began to show. By product, in 2021, the company’s sofa / bed and mattress / customized / integrated products contributed revenue of 92.67/33.38/6.60/3.140 billion yuan respectively, with a year-on-year increase of + 44.51% / + 42.75% / + 44.80% / + 41.13% respectively. On a quarterly basis, the company achieved revenue of 5.117 billion yuan in Q4 of 2021 and 4.54 billion yuan in Q1 of 2022, with a year-on-year increase of + 24.16% / + 20.05% and net profit attributable to the parent company of 427 million yuan and 443 million yuan respectively, with a year-on-year increase of + 359.61% (excluding the impact of goodwill impairment in 2020q4, with a year-on-year increase of + 33.3%) / + 15.11% respectively. The operating statement for the first year of 2022 is now higher than expected.
The price increase effectively hedged the rising pressure of raw material costs, and the profitability of the company was basically stable. Excluding the impact of the new standards, the company’s gross profit margin in 2021 increased from -1.10pcts to 28.87% year-on-year, of which the gross profit margin of domestic / export sales increased from -1.21 / + 0.97pcts to 34.50% / 18.14% respectively. In 2022, the gross profit margin of Q1 company increased from + 0.65pcts to 29.85% year-on-year. The company has conducted two rounds of price increases for domestic sales to transmit cost pressure. For export business, the company has also moderately raised prices and carried out value chain integration reform, so that the gross profit margin of the company is basically stable. In the future, with the further decline of raw materials and shipping costs, the company continues to reduce costs and increase efficiency, and the profitability of the company is expected to gradually pick up.
Under the disturbance of the epidemic, take the initiative to help dealers, and the operating cash flow is under pressure in the short term. In 2021, the company realized a net operating cash flow of RMB 2.041 billion, a year-on-year increase of – 6.41%. In 2022, under the pressure of the epidemic situation, the company actively launched a 1.2 billion yuan business assistance plan to support dealers’ cash flow, and moderately relaxed the collection time limit for dealers. As a result, the net operating cash flow of Q1 company in 2022 was – 530 million yuan. From the perspective of the whole year, the operating cash flow of the company will still be at a stable and healthy level.
Investment suggestion: the effect of category integration continues to appear, and the domestic and export business continues to increase. The company’s “software + customization” integration effect continues to highlight. By the end of 2021, the number of integrated large stores of the company has reached 108, promoting the steady improvement of customer unit value and multi category sales. We maintain the company’s profit forecast. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be RMB 2.106/2.576/3.098 billion respectively, corresponding to the current market value PE of 17 / 14 / 12x respectively, maintaining the “buy” rating.
Risk tip: the cost of raw materials fluctuates sharply, the national epidemic situation repeats, and the overseas demand weakens.
