\u3000\u30 Xuchang Ketop Testing Research Institute Co.Ltd(003008) 88 Winner Medical Co.Ltd(300888) )
Events
In 2021, the company achieved an operating revenue of 8.037 billion yuan, a year-on-year decrease of 35.87%; The net profit attributable to the parent company was 1.239 billion yuan, a year-on-year decrease of 67.48%; The non net profit attributable to the parent company was RMB 1.029 billion, a year-on-year decrease of 72.57%. The net operating cash flow was 872 million yuan, a decrease of 81.72% over the same period last year.
In the first quarter of 2022, the company realized an operating revenue of 2.322 billion yuan, a year-on-year increase of 2.37%; The net profit attributable to the parent company was 357 million yuan, a year-on-year decrease of 25.69%; The non net profit deducted from the parent company was 328 million yuan, a year-on-year decrease of 27.89%. The net operating cash flow was 397 million yuan, an increase of 111.45% over the same period last year.
The revenue of medical consumables products decreased significantly year-on-year and returned to the normal range in the early stage; The sales of consumer goods for healthy living increased steadily, and the construction of product strategies and channels was promoted in an orderly manner
From the perspective of product division, the business income of medical consumables decreased by 54.84% compared with the same period last year, but still increased by 2.733 billion yuan compared with 2019, with an average compound growth rate of more than 100% over the two years and a year-on-year decrease. The main reason is that since 2021, the epidemic situation in China has been effectively controlled, the global supply of epidemic prevention materials is sufficient, and the sales prices of operating room infection control products, disease control and protection products, disinfection and cleaning products have gradually returned to normal, Sales gradually returned to normal. The business income of healthy living consumer goods increased by 15.27% over the same period last year, including sanitary napkins, baby products, baby clothing and adult clothing. At the macro level, the recovery of the healthy living consumer goods industry is mainly due to the easing of the epidemic in China and the rebound of consumer demand and capacity; At the company level, due to its expansion and integration of online and offline sales channels and the establishment of new products and explosive products strategy, the brand awareness has been further improved.
The year-on-year decrease in the production capacity utilization of masks and protective clothing in medical consumables is mainly due to the gradual increase of production capacity in 2021, while the epidemic situation is further controlled and the demand is reduced. The production capacity utilization rate of cotton Spunlaced non-woven fabric has decreased, mainly due to the decline in the output of Spunlaced non-woven fabric, which is used to produce medical protective fabrics with more complex process.
From the perspective of regional division, the company’s domestic revenue accounted for 78.93%, and the decline in the proportion of overseas revenue was mainly due to the impact of the epidemic, the slowdown of global cargo transportation speed led to the shortage of global transportation capacity, the serious shortage of overall export shipping capacity, which promoted the significant increase of freight, delayed the delivery of some overseas orders, affected the overseas revenue and net profit, and the overseas revenue decreased by 71.67% compared with the same period of 20 years, However, it still increased compared with the same period in 19 years.
From the perspective of channel division, due to the improvement of brand influence and going deep into more terminal channels, disposable operating room consumables products are gradually accepted by Chinese hospitals, and grow rapidly in e-commerce channels. With the improvement of internal management, the supermarket channels of health consumer goods caused by the improvement of human efficiency, the introduction of new products, the addition of mother and baby stores and large chain supermarkets increased by 51.18% over the same period of 20 years. In Q1 2022, even if some stores could not open normally and logistics in some areas were interrupted due to epidemic control and personnel isolation in some areas, the sales revenue of the company’s offline stores still increased by 14.34% year-on-year in the first quarter of last year. Supermarket channels increased by 45.48% year-on-year in the first quarter of last year, mainly because the company added more than 380 large supermarkets in RT Mart East China, South China and central China, more than 4000 outlets of Watson, and more than 450 stores in 16 provinces and cities of Yonghui.
From a quarterly perspective, with the effective prevention and control of the global covid-19 pneumonia epidemic and large-scale vaccination, the orders of epidemic prevention products have decreased significantly, and there is a risk of unsustainable growth of sales revenue and net profit in the short term; The seasonal fluctuation of the demand for consumer goods for healthy life is small, and products such as cotton soft towels have a certain rigid demand attribute. The “double 11” online promotion will further promote consumers’ consumption of consumer goods for healthy life. According to the data of tmall pre-sale list in 2021, the company’s cotton soft towels, masks and other products have excellent performance. In the fourth quarter, the company’s revenue was further driven by the “double 11” online promotion, and the absolute scale was significantly higher than that of q2-q3. However, the current residents’ consumption enthusiasm has not been restored due to the limitation of the epidemic, Overall, it is the same as the first quarter of this year, and does not reflect the consumption characteristics of the peak season in the fourth quarter of the previous period (the situation that the sales account for more than 30% is no longer applicable). 22q1 achieved a slight increase on the basis of the high base with outstanding performance in Q1 last year and ushered in a “good start”.
In the healthy consumer goods sector, as of December 31, 2021, the company had 345 offline stores in total. (including 322 Direct stores and 23 franchise stores). The net increase of stores in 2021 exceeded the annual level of 19 years and began to return to the situation before the epidemic. Due to the large number of new stores, the average revenue of stores is basically the same as that of the same period in 2020. The company integrates the brand concept into the store design, employs well-known designers from abroad to upgrade the store image, strengthen the display and experience of the store, and further improve the brand awareness while improving the company’s sales revenue.
In 2021, the net profit attributable to the parent company and net profit deducted from non attributable to the parent company decreased significantly compared with the same period of the previous year, by 67.48% and 72.57% respectively. The overall change of non recurring profit and loss was large, with an increase of 151 million yuan, of which the increase of investment income was large, mainly due to the increase of cash management income. In 2022q1, the net profit attributable to the parent company and net profit deducted from non attributable to the parent company still decreased compared with the same period of the previous year, but after excluding the equity incentive expenses, the net profit attributable to the parent company increased by 66.55% compared with the fourth quarter of 2021.
In 2021, the comprehensive gross profit margin decreased by 9.67pct and the period expense rate increased by 11.70pct; In 2022q1, the comprehensive gross profit margin decreased by 6.91pct and the period expense rate increased by 0.60pct
From the perspective of gross profit margin, the overall gross profit margin of the company decreased by 9.67 percentage points in 2021, mainly due to the decline of gross profit margin in the field of medical consumables. Among them, the price of disease control and protection products gradually returned to the normal level, and the gross profit margin of corresponding products decreased. In addition, the gross profit margin of the healthy consumer goods industry has also declined to a certain extent. Combined with the channel business model, the decline of the gross profit margin of the corresponding offline channels has a greater drag. From the perspective of expenses, the advertising and marketing expenses of consumer goods e-commerce channels and medical consumables e-commerce channels in the cotton era on the third-party platform increased (a year-on-year increase of 320 million yuan to 692 million yuan), and the amortization of use right assets increased by the new leasing standards (a direct increase of 192 million yuan over the same period of the previous year), resulting in an increase in the sales expense rate. In addition, the company released the equity incentive plan during the year, and the total amortization cost is expected to be 509 million yuan, of which 285 million yuan is expected to be amortized in 2021, which will have a certain impact on the annual management expenses.
In 2022q1, the comprehensive gross profit margin decreased by 6.91 percentage points to 47.77%, because some high price orders signed in the second half of 2020 for export were delivered in the first quarter of 2021, which raised the gross profit margin and net profit margin in the first quarter of 2021, resulting in a decline in the first quarter of 2022 on the basis of the relatively high base of the previous year.
The three brands explore the market of high-quality consumer goods, and product optimization brings sustainable profits
The company always adheres to the core business principle of “quality is prior to profit, brand is prior to speed, and social value is prior to enterprise value”. It has three major brands: “winner Winner Medical Co.Ltd(300888) ,” PurCotton cotton era “and” pureh2b Jinliang life “, which helps the company improve customer stickiness, stabilize product prices and expand market share in the fierce market competition, so as to ensure the sustainability and stability of profitability, Gradually grow into a large health enterprise with coordinated development in the medical and consumer sectors, continuously improve the control ability of quality, cost and delivery, and build the advantages of the whole industrial chain from procurement, production, sterilization, warehousing to delivery.
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The company attaches importance to the R & D and upgrading of products. In the field of consumer goods, the company has developed products such as pure cotton soft towel, pure cotton wet towel, all cotton surface sanitary towel, face washing towel and disposable underwear. It has been invited to participate in the formulation of 14 national and industrial standards, and draft and formulate standards such as performance requirements of all cotton nonwoven surgical dressing, contact wound dressing and technical specifications of children’s mask, The wholly-owned subsidiary cotton era, as the first drafter and the company as the main drafter, has led to the formulation of the national standard for soft towels (GB / t402762021), which requires that soft towel products should be marked with fiber composition and content, and the allowable deviation of fiber content should comply with the provisions of GB / t29862. The standard was issued on May 21, 2021 and implemented on December 1, 2021. In December 2021, the company’s “all cotton Spunlaced non-woven fabric and its products” was selected as the single champion of national manufacturing industry. As of December 31, 2021, the company has obtained 45 invention patents, 518 utility model patents and 301 design patents in China; It has obtained 56 invention patents and 6 utility model patents abroad. The company was recognized as “leading enterprise in independent innovation industry” by Shenzhen Municipal People’s government and “Shenzhen intellectual property advantage enterprise” by Shenzhen municipal market supervision and Administration Bureau.
Open the omni channel retail mode, “small program” to get through Wuxi Online Offline Communication Information Technology Co.Ltd(300959) , and improve the commodity coverage and brand recognition
The company has launched an omni channel retail model to provide consumers with undifferentiated shopping experience by integrating physical channels, e-commerce channels and mobile e-commerce. In terms of online channels, the company’s “winner Winner Medical Co.Ltd(300888) ” and “PurCotton cotton era” have completed the layout of mainstream third-party e-commerce platforms including tmall and jd.com, realizing the coverage of the vast majority of online shopping consumer groups, and the product sales data ranks in the forefront of relevant product categories of major e-commerce platforms. In terms of offline channels, according to the product positioning of high-quality consumer goods in the cotton era, the company mainly arranges in high-end boutique supermarkets and regional leading supermarkets, and also has a special sales team to cover the batch purchase or customized purchase needs of enterprise customers. Core products such as cotton soft towel of cotton era and Princess Naisi sanitary towel series have been successfully stationed in chain supermarkets, chain convenience stores and offline mother and baby stores.
By integrating Wuxi Online Offline Communication Information Technology Co.Ltd(300959) resources, the company complements the convenience advantages of online channels and the consumption experience advantages of offline channels. The launch of “commodity digitization” and “Omni channel digitization” systems has greatly improved the sales and delivery efficiency and significantly improved the consumer experience. In the medical consumables sector, the company’s distributors in the Chinese medical business hospital market have covered more than 4000 hospitals in more than 30 provinces (cities and autonomous regions) across the country; Dealers in the retail pharmacy market have covered 120000 retail pharmacies in more than 20 provinces (cities and autonomous regions) across the country; The customers and distributors of foreign medical business have covered more than 100 countries and regions such as Europe, Japan and the United States. Through the in-depth optimization and integration of various channel resources, the company has opened up the flow integration and sales interworking between offline stores and online apps, so as to further improve its business efficiency and performance. Offline consumers can meet their subsequent consumption needs through online channels. Online consumers can also further obtain product information and service experience through offline channels. Channels drain each other, and online and offline traffic is effectively precipitated. As of December 31, 2021, the number of users in the cotton era has reached 35 million, including more than 16 million registered members in the private domain platform (nearly 7 million registered members in stores and nearly 10 million registered members on the official website and applet).
Investment advice
The company is an independent and innovative enterprise that develops, produces and sells medical dressings and healthy consumer goods with cotton as the main raw material. It not only has its own brands such as “winner Winner Medical Co.Ltd(300888) ” and “PurCotton cotton era”, but also provides intermediate products and comprehensive Spunlaced non-woven fabrics for leading enterprises at home and abroad. From the perspective of products, after years of development, the company has become a leading enterprise in China’s medical dressing industry. With the accumulation of core patented technology and in-depth research on cotton, the company has a keen insight into the needs of consumers for high-quality products, advocates the concept of “comfort, health and environmental protection”, and launched all cotton era products with cotton as the main raw material by virtue of the medical quality control system formed by the medical background, which has won the love and praise of the market, Cotton soft towels, sanitary napkins and other main products are the main driving force for the growth of the company’s revenue scale and the improvement of profitability. The epidemic situation drives medical dressing products to become a new growth point of the company’s business. From the perspective of channels, the company implements the strategic development strategy of “digital operation of commodities, digital operation of all channels, digital operation of consumers, digital operation of intelligent logistics and digital operation of Intelligent Manufacturing”. At the same time, it develops Wuxi Online Offline Communication Information Technology Co.Ltd(300959) sales channels and realizes the drainage between channels to increase customer stickiness and brand awareness. To sum up, we predict that the company will achieve revenue of 9.253/10.559/11.679 billion yuan, net profit of 1.466/16.98/1.931 billion yuan, corresponding to PS of 2.70/2.37/2.14 times, EPS of 3.44/3.98/4.53 yuan / share and PE of 17 / 15 / 13 times respectively in 2022, 2023 and 2024, maintaining the “recommended rating”.
Risk tips
Risk of unsustainable revenue of medical dressings; The risk of intensified market competition; The risk of brand channel promotion falling short of expectations.
