\u3000\u3 Jiangsu Eastern Shenghong Co.Ltd(000301) 009 Hangzhou Coco Healthcare Products Co.Ltd(301009) )
Events
In 2021, the company realized an operating revenue of 1.186 billion yuan, a year-on-year decrease of 27.44%; The net profit attributable to the parent company was 40 million yuan, a year-on-year decrease of 81.43%; The non net profit deducted from the parent company was 33 million yuan, a year-on-year decrease of 83.42%, and the net operating cash flow was 51 million yuan, a year-on-year decrease of 87.24%.
In 2022q1, the company realized an operating revenue of 322 million yuan, a year-on-year decrease of 3.34%; The net profit attributable to the parent company was 02 million yuan, a year-on-year decrease of 95.14%; The non net profit deducted from the parent company was RMB 01 million, a year-on-year decrease of 96.31%, and the net operating cash flow was RMB – 26 million, an increase of 44.22% over the same period of last year.
In 2021, the company was greatly affected by the fluctuation of mask business and baby care products OEM business, and was optimistic about the development of its own brand adult incontinence products business for a long time
The company is a leading manufacturer of disposable sanitary products in China and adopts the operation mode of ODM + independent brand two wheel drive; The dominance of ODM will not change in the short term. From the perspective of product business, ODM business products mainly produce baby care products and pet hygiene products, and independent brand business mainly produces adult series products. In 2021, the revenue was mainly affected by the decline of income related to baby care products. At the same time, with the gradual improvement of the epidemic, the sales of masks continued to decline, which also had a certain impact on the company’s revenue. Excluding the impact of income from epidemic prevention materials, the company’s revenue in 2021 decreased by 19.01% compared with the same period of the previous year. Excluding the impact of income from epidemic prevention materials, the independent brand business actually realized a year-on-year increase of 6.15%, and the decline of ODM business also narrowed.
From a quarterly perspective, in 2021, except that the first quarter increased compared with the same period last year, they all decreased year-on-year; After deducting the impact of epidemic factors, 202q4 is the peak season in winter (the partial heat in summer will reduce the use of products to a certain extent) and the consumption Festival promotion activities at the end of the year. The year-on-year decline is narrowed compared with the previous two quarters, but the advantage of the traditional peak season is not obvious; Combined with the 2020 sales data disclosed by the company, the impact of mask business on the company is mainly concentrated in q22020q4, and the impact degree is basically the same as Q1, falling to less than 10 million yuan. Although the company achieved a slight year-on-year decline of q2.24 billion since the end of the cold season in 2018, the company’s sales performance was slightly higher than that of q2.4 billion in 2021, which showed that the company gradually achieved a year-on-year decline of q2.4 billion in 2021.
In 2021, the gross profit margin of sales was 18.64pct, a year-on-year decrease of 9.19pct, and the expense rate during the period increased by 3.90pct; In 2022q1, the gross profit margin of sales was 12.07 PCT, a year-on-year decrease of 13.30 PCT, and the expense rate increased by 0.58 PCT during the period
In 2021, the company achieved a gross profit margin of 18.64%, a sharp decline over the same period of last year. On the one hand, in order to reduce the gross profit of the company’s own brand (for example, ODM) will also be promoted to reduce the gross profit of the company’s own brand; On the other hand, the sales of mask business with the highest gross profit level fell sharply, so the gross profit margin changed structurally.
The company’s expense rate during 2021 increased by 3.90 percentage points year-on-year. Among the expenses during the period, the sales expense ratio increased the most, with an increase of 3.64% over the same period of last year, mainly due to the increase of marketing expenses (a significant increase of 175042 million yuan to Ningbo Fubang Jingye Group Co.Ltd(600768) million yuan year-on-year) and human resources costs. At the same time, the proportion of management expenses in sales revenue increased by 1.61% over the same period of last year, mainly due to the cancellation of tax and social security concessions in 2020 in 2021 and the increase of listing expenses and depreciation expenses of the company in 2021; The decrease in financial expenses was mainly due to interest income (a year-on-year decrease of 102948 million yuan to -126485 million yuan) and exchange gains and losses (a year-on-year decrease of 17.055 million yuan to 4.3736 million yuan).
During the first quarter of 2022, the expenses increased by 0.58% year-on-year. The company continued to expand its own brand market, the relevant sales expenses continued to rise, the management expenses increased slightly, and the other expenses were not different from those in the same period.
Intelligent selection of ODM high-quality customers + independent brand dual drive mode to continuously improve brand strength
The company has deeply cultivated its own brand +odm two wheel drive strategy and continuously improved its own brand business. In the field of disposable sanitary products, the company diversified its business layout to calmly cope with the changes of industry and population structure. In the field of ODM, the company provides brand customers with a full range of services, and pays attention to strategic win-win with customers on the basis of in-depth understanding of industry development trends and customer needs. Over the years, through continuous optimization of product solutions, the company has established a good reputation in the industry and maintained a number of stable high-quality ODM customers, making the company have strong customer advantages in the industry.
At present, the company has become the leader of adult incontinence products in China and one of the leading brands of baby diaper supply chain solutions. In 2021, in order to further activate the brand power and continuously enhance the brand awareness and market reputation, the company launched the brand upgrading plan with Shanghai huayuhua Marketing Consulting Co., Ltd., made every effort to create the concept of “dynamic elderly”, led to enjoy the new experience of old and happy life, and efficiently improved the brand value.
Relying on the strength of independent innovation and scientific research advantages to create a rich product structure
In 2021, the company participated in the formulation and release of 5 national standards and 3 industry group standards. The company’s R & D team has rich experience, has a solid R & D foundation and strong R & D ability, and continues to carry out product innovation. The team has accumulated a number of core technologies through independent research and development and has been successfully applied to product production. At present, the company has a total of 256 patents, including 45 invention patents and outstanding R & D ability. It has been rated as a national intellectual property advantage enterprise, one of the top 100 innovative enterprises in Zhejiang Province, and the second batch of specialized and special new “little giant” enterprises of the Ministry of industry and information technology. Thanks to continuous R & D investment, in the field of independent brands, the company has formed a product echelon with rich categories, excellent product structure and good market prospects. In addition, the company continues to optimize and adjust the product structure, strengthen the R & D and marketing expansion of medium and high-end products, and meet the user’s consumption concept of gradual upgrading. In 2021, the company applied for and obtained one excellent industrial product in Zhejiang Province and two high-quality products in Hangzhou. In view of the awakening consumer awareness of the mild incontinence group, the company launched the mild incontinence products invisible absorbent towel and invisible travel pants specially designed for Asian women, and launched professional men’s absorbent towel, which further expanded the product category and promoted the development of independent brand business.
Investment advice
The company adopts the development mode of “ODM + independent brand” to engage in the business of disposable sanitary products. Its main products include baby care products, adult incontinence products, pet sanitary products and masks. Among them, baby sanitary products and adult incontinence products account for the highest proportion, and adult incontinence products are gradually becoming the dominant business of the company. From the perspective of products, the company provides safe, comfortable and high-quality personal health care products for consumers of all ages. The steady development of self-supporting adult incontinence products will become the main driving force for the growth of the company’s revenue scale and the rise of profitability in the future. From the perspective of channels, the company implements the development strategy of “direct retail expansion and deep cultivation of e-commerce construction”, optimizes offline dealer channels, innovatively introduces the construction of direct retail channels, and preempts the dividends of direct retail channels; On the other hand, as one of the first companies to enter the e-commerce channels in the field of adult incontinence, the company actively improved the construction of online e-commerce channels and built a “reliable well-being” one-stop elderly care procurement platform to further deepen the company’s voice and brand influence in the elderly care industry. To sum up, we predict that the company will achieve revenue of RMB 1.542/19.00/2.320 billion, net profit of RMB 77 / 128 / 232 million, corresponding to PS of 2.55/2.07/1.69 times, EPS of 0.28/0.47/0.64 yuan / share and PE of 51 / 31 / 23 times respectively in 2022, 2023 and 2024, maintaining the “recommended rating”.
Risk tips
The risk that the conversion degree of consumers’ health awareness and consumption habits is lower than expected; The direct retail channel is less than expected; The revenue of key customers is lower than expected; Risk of price fluctuation of raw materials.
