\u3000\u3 Shengda Resources Co.Ltd(000603) 816 Jason Furniture (Hangzhou) Co.Ltd(603816) )
Events
The company disclosed the annual report of 2021 and the quarterly report of 2022. In 2021, the company achieved a revenue of 18.342 billion yuan, a year-on-year increase of 44.81%, a net profit attributable to the parent company of 1.664 billion yuan, a year-on-year increase of 96.87%, and a deduction of non net profit of 1.427 billion yuan, a year-on-year increase of 141.55%. It is proposed to convert the capital reserve into 3 shares for every 10 shares and distribute a cash dividend of 13.20 yuan (including tax). In the first quarter of 2022, the company achieved a revenue of 4.540 billion yuan, a year-on-year increase of 20.05%, a net profit attributable to the parent of 443 million yuan, a year-on-year increase of 15.11%, and a deduction of non net profit of 382 million yuan, a year-on-year increase of 20.30%.
Key investment points
The company’s revenue scale increased rapidly in 2021, and the net profit attributable to the parent company was close to the lower limit of performance forecast: at the revenue end, the company achieved a revenue of 18.342 billion yuan in 2021, with a year-on-year increase of 44.81%. In terms of quarters, 21q1 / Q2 / Q3 / Q4 achieved a revenue of 37.8/42.3/52.1/51.2 billion yuan respectively, with a year-on-year increase of 65.3% / 64.5% / 41.4% / 24.2%. On the net profit side, in 2021, the company realized a net profit attributable to the parent company of 1.664 billion yuan, with a year-on-year increase of 96.87%. Excluding the impact of goodwill impairment of the previous year (in 2020, the company’s goodwill impairment loss of 484 million yuan), it increased by 25.16% year-on-year; Non net profit deducted was RMB 1.427 billion, with a year-on-year increase of 141.55%. Excluding goodwill impairment, the company’s performance was close to the lower limit of previous performance forecast. On a quarterly basis, 21q1 / Q2 / Q3 / Q4 achieved a net profit attributable to the parent company of RMB 3.9/3.9/4.7/430 million respectively, with a year-on-year increase of 25.6% / 43.9% / 7.2% / 359.6%. After excluding the impact of goodwill impairment in the previous year, 21q4 increased by 33.3% year-on-year. 22q1, the company’s revenue and net profit attributable to the parent company were 4.54 billion yuan and 443 million yuan respectively, with a year-on-year increase of 20.1% and 15.1%. Under the influence of the epidemic in China, the growth rate of the company in the first quarter remained unchanged, and the revenue performance continued to grow steadily.
The scale of domestic and foreign sales increased significantly, and the gross profit margin of foreign trade improved: in terms of domestic sales, the company achieved a revenue of 10.712 billion yuan in 2021, a year-on-year increase of 40.05%, accounting for 58.4% (year-on-year – 2.0pct), and the gross profit margin of domestic sales was 34.5%. Affected by the rise of raw material prices, the gross profit rate fell by 1.2pct year-on-year. The company raised the price of domestic sales twice in 2021, and it is expected that the profitability of domestic sales will improve this year. In terms of offline channels, in the past 21 years, the company has optimized and adjusted its stores, promoted the construction of category integrated stores and large stores, and significantly improved the store efficiency. By the end of the 21st century, the company had a net decrease of 277 stores and a net increase of 42 stores to 6304 and 152 stores respectively, and had initially realized the “1 + N + X” channel layout. The speed of integrating the layout of large stores was accelerated. By the end of the 21st century, the company had 541 large stores, including 108 software customization integrated stores. At the same time, the company continued to explore the channel layout closer to users such as supermarkets, shopping centers and community stores, so as to open up traffic. In terms of foreign trade, in 2021, the revenue reached 6.918 billion yuan, a year-on-year increase of 48.68%, accounting for 37.7% (year-on-year + 1.0pct), and the gross profit margin of foreign trade business increased by 0.97 PCT to 18.14% year-on-year. It is expected that under the background of the marginal improvement of external factors of shipping and exchange rate and the reform of the integration of the company’s foreign trade value chain, the profitability of foreign trade business is expected to improve this year.
We are committed to building integrated products for guest dining and sleeping space, and the main category sofa and three high potential categories have achieved high growth: by category, in 2021, sofa achieved a revenue of 9.267 billion yuan / + 44.51%, of which the volume is + 45.4% and the price is – 0.6%; Soft beds and mattresses achieved a revenue of 3.338 billion yuan / + 42.75%, of which the volume was + 43.5% and the price was – 0.5%; Driven by category integration, customization business achieved revenue of 660 million yuan / + 44.80%, and supporting products achieved revenue of 3.140 billion yuan / + 41.13%. The revenue of sofa, bed, customized and supporting products accounted for 50.5%, 18.2%, 3.6% and 17.1% respectively.
The price of raw materials disturbs the gross profit margin of domestic sales, and the profitability of foreign trade is expected to be repaired: in terms of profitability, the gross profit margin of the company decreased by 6.3pct to 28.9% year-on-year in 2021. After excluding the impact of freight adjustment, the gross profit margin decreased by 1.1pct year-on-year, mainly due to the decline of gross profit margin of domestic sales. In terms of expense ratio, the total expense ratio of the company during 2021 decreased by 6.1pct to 18.6%, of which the sales / management / R & D / financial expense ratio was 14.7% / 1.8% / 1.7% / 0.4%, with a year-on-year increase of – 5.0 / – 0.6 / + 0.02 / – 0.6pct. After excluding the impact of freight adjustment, the company’s sales expense ratio increased by 0.3pct year-on-year. Under the comprehensive impact, the company’s net profit ratio attributable to the parent in 2021 was 9.1%, with a year-on-year increase of 2.4pct. After excluding the impact of goodwill impairment, the net profit ratio attributable to the parent decreased by 1.4pct year-on-year. In terms of inventory, by the end of the year, the company’s inventory was 2.44 billion yuan / + 30.44%, and the inventory turnover days were 59 days, a year-on-year decrease of 9 days. In terms of cash flow, the net cash flow from operating activities of the company in 2021 was 2.041 billion yuan, a year-on-year decrease of 6.4%. 22q1 company’s net cash flow outflow from operating activities was 530 million yuan, which was due to the company’s assistance to dealers under the influence of the epidemic, and dynamically adjusted the payment rhythm of dealers.
Investment suggestion: in 2018, the company began its retail transformation, focusing on user operation, store digitization and category full house expansion, and is committed to becoming a comprehensive home retail operator. In 2021, the company’s domestic and foreign sales business achieved rapid growth, the cultivation of three high potential categories achieved good results, and the profitability is expected to improve this year. We expect the company’s earnings per share from 2022 to 2024 to be 3.21, 3.93 and 4.74 yuan respectively, corresponding to 19 and 15 times of the company’s PE in 22 and 23 years, maintaining the “buy-b” proposal.
Risk warning: price fluctuation of raw materials; China’s epidemic has repeatedly disturbed offline sales; Real estate industry policy uncertainty.
