\u3000\u3 Guocheng Mining Co.Ltd(000688) 793 Shenzhen Breo Technology Co.Ltd(688793) )
Performance review
On April 24, Shenzhen Breo Technology Co.Ltd(688793) released the annual report of 21 years and the first quarter report of 22 years. In 2021, the operating revenue was 1.19 billion yuan, a year-on-year increase of + 43.9%, and the net profit attributable to the parent company was 92 million yuan, a year-on-year increase of + 29.9%. 22q1 operating income was 250 million yuan, a year-on-year increase of + 15.3%, and the net profit attributable to the parent was -9.89 million yuan (11.13 million yuan in the same period last year).
Business analysis
2021 annual report: revenue side: new product iteration + continuous channel improvement + innovative marketing overweight to promote high growth. In 2021, the company achieved an operating revenue of 1.19 billion yuan, a year-on-year increase of + 43.9%; The operating revenue of 21q4 was 380 million yuan, a year-on-year increase of + 23.8%. Mainly from: 1) new product iteration. Moxibustion series was launched in 21 years, with a revenue of 60.25 million yuan. The original main series of products have been continuously upgraded, including head massager dream6, neck massager neckc2, etc. 2) Channels have been continuously improved. The online revenue was 680 million yuan (+ 58%), the proportion of offline shopping center stores was increased, and Ka chain, agent franchise, channel distribution and other modes were continuously explored and improved. 3) New platform promotion and innovative marketing were strengthened. Profit side: the gross profit rate decreased slightly and the period cost was optimized. The gross profit margin in 2021 was 56.73%, with a year-on-year increase of -1.63pct. The rates of sales, management, R & D and financial expenses are -0.65, -0.03, -0.50 and + 0.39pct respectively. The scale expansion led to the continuous optimization of the company’s sales expense rate, and the increase in financial expenses was mainly due to the implementation of new leasing + exchange gains and losses.
The first quarterly report of 2022: the operating revenue was 250 million yuan, a year-on-year increase of + 15.3%. Online growth continued to shine, with a year-on-year increase of + 49%. Offline stores accelerated and online integration, with a year-on-year increase of – 15%, trying to overcome the impact of the epidemic. Profit side: the gross profit margin decreased and the expenses increased temporarily during the period. The gross profit margin decreased by 2.78 PCT, and sales, management and R & D were + 3.61, + 2.32 and + 1.27 PCT respectively. It is mainly due to the rigidity of the operation cost of Direct stores under the repeated offline epidemic, the increase of the salary of management and R & D personnel, the increase of information construction consulting service fee, etc.
Profit adjustment & investment suggestions
The company’s products have a stable high-end market position and strong product power. With the continuous attempts of channel end structure optimization and new marketing, we are continuously optimistic about the medium and long-term development of the company. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be 119 million yuan, 172 million yuan and 239 million yuan respectively, with a year-on-year increase of 30.1%, 43.8% and 38.9% respectively. EPS is 1.94 yuan, 2.79 yuan and 3.87 yuan respectively. The current share price corresponds to 28.4x, 19.8x and 14.3x PE from 2022 to 2024, maintaining the “buy” rating.
Risk tips
The epidemic repeatedly affects the sales risk of Direct stores, the terminal demand of massage small household appliances is less than the expected risk, and the iterative upgrading of products is less than the expected risk.
