\u3000\u3 Guocheng Mining Co.Ltd(000688) 793 Shenzhen Breo Technology Co.Ltd(688793) )
The company disclosed the 2021 annual report and the first quarterly report of 2022:
21. Annual income: 1.2 billion (YoY + 44%), 92 million (YoY + 30%) attributable to the parent, and 77 million (YoY + 22%) deducted
21q4: the income is 380 million (YoY + 24%), 26 million (yoy-31%) belong to the parent, and 26 million (yoy-32%) are deducted
22q1: income of 250 million (YoY + 15%), return to parent company of – 100 million (yoy-189%), deduction of – 10 million (yoy-197%)
Under the influence of Q1 epidemic, it turned into a loss, and the profit performance was lower than expected.
Revenue side: online high growth, offline Epidemic Damage
[2021] by channel: the online revenue is 680 million, yoy + 58%, and the high growth continues. Offline direct sales + 34%, store and expand new stores (the number of Direct stores increased from 165 to 186 at the end of 2020). At the same time, the income of single stores has been repaired under the low base of the epidemic in 2020. Offline distribution + 12%, and it is expected that relevant orders of major customers will be exempted from the epidemic; ODM + 45%, Russian customer growth.
By category: neck / eye / head + 50% / + 19% / + 11% respectively, and the new category of moxibustion increased to 5% of the revenue. Neck and moxibustion are the core of growth.
[2q1] online revenue increased by + 4.91 billion. The offline revenue was 80 million, and the epidemic was damaged by – 15%. After the outbreak in March, the damage of offline transportation hub stores is expected to intensify.
Profit side: the epidemic affects offline profits
[2021] gross profit margin 56.7% (- 1.7pct), net profit margin 7.8% (- 0.8pct). The gross and net profit margins of online channels are expected to be relatively stable, and the profitability of offline channels is expected to be slightly affected by Q4 epidemic fluctuations.
[2022q1] gross profit margin 53.9% (- 2.8pct), net profit margin 4.0% (- 9.15pct). The sharp decline in Q1 net interest rate is still mainly due to the impact of the epidemic on offline stores. After the recovery of Ping efficiency, it is expected that the company’s profit will be significantly improved.
Release equity incentive to stabilize confidence
The company plans to issue 2.87% of the total share capital restricted shares to encourage 149 employees (accounting for 14% of the total employees).
Incentive target: Based on 21 years, the income and profit CAGR of 22-24 years is 30% (excluding equity incentive expenses). (Note: considering that Q1 performance has been released, the equity incentive target is to achieve 60% profit growth in q2-4 in 22 years after excluding incentive expenses, and about 47% after considering expenses)
Expenses: 12 million, 15 million, 06 million and 02 million will be amortized in 22-25 years respectively, and the impact of the rate is expected to be less than 0.8%
Investment suggestion: buy rating.
Under the epidemic situation, the company’s offline business income and profit are double killed, and there may be great repair flexibility after the epidemic; Incentive goals also underpin short-term performance. The profit forecast is adjusted under the disturbance of the epidemic. It is estimated that the profit in 22 and 23 years will be 110 million and 180 million (the previous value is 200 million and 300 million), yoy + 19% and + 65%, corresponding to pe31 and 19x. Maintain buy rating.
Risk tip: the epidemic disturbance is higher than expected, the new products are lower than expected, and the channel expansion is lower than expected
