\u3000\u3 Guocheng Mining Co.Ltd(000688) 169 Beijing Roborock Technology Co.Ltd(688169) )
Event: in 2021, the company realized an operating revenue of 5.837 billion yuan, a year-on-year increase of + 28.84%, and a net profit attributable to the parent company of 1.402 billion yuan, a year-on-year increase of + 2.41%; Among them, 2021q4 achieved an operating revenue of 2.01 billion yuan, a year-on-year increase of + 29.62%, and a net profit attributable to the parent company of 386 million yuan, a year-on-year increase of – 17.8%. In Q1 of 2022, the company achieved an operating revenue of 1.36 billion yuan, a year-on-year increase of + 22.3%, and a net profit attributable to the parent company of 343 million yuan, a year-on-year increase of + 8.76%. It is proposed to distribute a cash dividend of RMB 21.00 (including tax) to all shareholders for every 10 shares.
China’s revenue has increased rapidly, and the market share has increased: new floor sweepers and floor washers drive the company’s revenue growth. By category, the company’s annual revenue of floor sweepers was 5.6 billion yuan, a year-on-year increase of 26.9%, that of handheld products was 230 million yuan, a year-on-year increase of 102.4%, and that of private brands was 5.767 billion yuan, accounting for 98.80%, a year-on-year increase of 40.77%. Among them, the income of 21h2 sweeper was 3.61 billion yuan, a year-on-year 32.9%, and the income of handheld products was 140 million yuan, a year-on-year 260.5%. In 21 years, the revenue of private brand floor sweepers was about 5.5 billion yuan, a year-on-year increase of 38.5%, of which 21h2 revenue was 3.31 billion yuan, a year-on-year increase of 31.8%. In the 21 years of related party transactions, the company sold 731242 million yuan of goods to Mijia, a year-on-year increase of – 83%, accounting for 1.3% of the company’s revenue. In 22 years, the company expects the sales of related party transactions to be 23 million yuan, a year-on-year increase of – 69%. The company’s Q1 sales in China increased rapidly, driving the growth of overall revenue. We expect the revenue growth rate of private brand floor sweepers in China to be 100% +, and that in overseas countries to be single digit growth.
The company increased the investment in sales expenses, and the decline in overseas self operated sales affected the gross profit margin: in 2021, the company’s gross profit margin was 48.11%, year-on-year -3.22pct, and the net profit margin was 24.03%, year-on-year -6.2pct; The gross profit margin of 2021q4 was 44.74%, year-on-year -6.72pct, and the net profit margin was 19.22%, year-on-year -11.09pct. The decrease in gross profit margin is mainly due to the fact that the annual report of 2021 adjusted the freight to the cost. Therefore, the cost of 2021 includes freight. After adjustment, the gross profit margin in 2020 is about 49.7%. Therefore, the decline of comparable gross profit margin in 2021 by 1.6pct is mainly due to the impact of raw materials. In terms of China and abroad, the company’s gross profit margin in China / overseas in 21 years was 47.76% / 48.36%, with a year-on-year increase of + 1.33pct / – 9.93pct. The increase in gross profit margin of domestic products was mainly due to the decrease in the proportion of MI family products; We believe that the decline in overseas gross profit margin is mainly due to the 11% decline in Amazon sales in the United States. The gross sales difference of 21q1-4 of the company was 39.9% / 36.9% / 33.5% / 23.6% respectively. The gross sales difference of single Q4 was – 11.7pct year-on-year and – 10PCT month on month. The large change of gross sales difference is mainly due to the increase of expense investment during Q4 promotion. In addition, the income tax rate of the company in 20q4 is only about 6%, mainly because the subsidiary stone innovation has obtained the software enterprise certificate issued by Beijing software and Information Service Industry Association, which is valid for one year. Since it has made profits since 2019 and the tax preference expires in three years, the subsidiary began to levy 12.5% enterprise income tax in 2021.
The company’s sales expense ratio increased significantly, mainly due to the corresponding increase in promotion fees, platform fees and labor costs in order to further expand domestic and foreign markets, as well as the increase in share based payment expenses in the current period.
Investment suggestion: we believe that the introduction of new products will complement the original price band, enrich SKU and make the product structure more healthy and balanced. We expect that in 22 years, the company will continue to invest in sales and R & D expenses, continuously improve products and expand brand awareness. It is expected that the efficiency of sales expenses is expected to be improved. At the same time, the company’s performance is expected to be improved due to the upgrading of product structure. Based on the company’s annual report and the first quarterly report, we appropriately lowered the gross profit margin and tax rate. At the same time, we slightly increased the revenue growth based on the company’s sales in China. It is estimated that the net profit in 22-24 years will be RMB 1.8/22/2.7 billion (the value was RMB 1.7/2.1 billion 22-23 years ago). The corresponding dynamic valuation of the current stock price is 22x, 17x and 14x, which is raised to the “buy” rating.
Risk warning: the risk of rising raw material prices; Private brand growth is less than expected; Overseas market expansion is less than expected; Changes in the macroeconomic environment have led to lower than expected market demand.
