\u3000\u3 China Vanke Co.Ltd(000002) 327 Shenzhen Fuanna Bedding And Furnishing Co.Ltd(002327) )
Key investment points
Event: the company released its 2021 annual report and the first quarterly report of 2022: in 2021, it realized revenue of 3.18 billion (+ 10.6%), net profit attributable to the parent company of 546 million (+ 5.7%), single Q4 revenue of 1.19 billion (+ 1.3%), and net profit attributable to the parent company of 229 million (- 5.4%). In 2022q1, the revenue was 670 million (+ 6.8%), and the net profit attributable to the parent company was 105 million (+ 13.8%). The company plans to pay a cash dividend of 6 yuan for every 10 shares, with a dividend rate of 7.41%.
E-commerce continued the trend of high growth, and retail management promoted the improvement of efficiency
Online channel: the effect of refined operation is obvious, and the gross profit margin continues to improve. In 2021, the revenue of e-commerce was 1.323 billion (+ 16.6%), accounting for 2.1pct to 41.6%. Due to the adjustment of accounting policies in 2021, the freight was adjusted to the operating cost, and the gross profit margin of the same caliber increased by 2.3pct to 46.2%. The highlights of e-commerce performance come from: 1) optimization of commodity structure: the rapid growth of medium and high-end categories such as down quilt and silk quilt and independent brand mattresses; 2) Deepening the flexible supply chain: optimize the personalized SKU and commodity rolling program, and improve the inventory; 3) Optimization of live broadcasting channels: continuous layout of self broadcasting, cooperation with talent, etc. Offline channels: continuously promote the improvement of product power and retail management ability. 1) Direct channels: in 2021, the revenue was 767 million (+ 10.4%), the gross profit margin of the same caliber decreased by 1.1pct to 65.3%, the number of Direct stores increased by 33 to 470, and the number of members reached 1.3 million. 2) Franchise channels: in 2021, the revenue was 814 million (+ 5.0%), the gross profit margin of the same caliber increased by 1.1pct to 50.0%, and the net number of franchise stores increased by 26 to 1055. In 2021, the company invested in the following channels: 1) upgrading of functional categories: the series of innovative moisturizing skin functions, cool summer quilts, black gold gel pillow and new national embroidery series. 2) Develop customer service support management system and use data marketing mode to empower shopping guides to improve sales performance; 3) Complete the ERP inventory integration project, revitalize the Inventory Scheduling of all channels, optimize the turnover efficiency of goods and effectively reduce the transportation cost.
In terms of profitability, under the pressure of rising raw material prices and labor costs, the company’s gross profit margin increased by 1.4pct to 52.1% in 2021. Due to the increase of period expense rate and income tax rate and the decrease of 0.4pct in return on investment, the company’s net profit margin decreased by 0.8pct to 17.2%. In terms of turnover efficiency, at the end of 2021, the inventory was 810 million (+ 7.3%), the growth rate was lower than that of revenue, and the number of inventory turnover days decreased by 30 days to 186 days; The accounts receivable were 200 million (- 11%), and the turnover days decreased from 4 days to 20 days.
22q1 has outstanding toughness, and the growth of franchise is expected to accelerate throughout the year
Under the influence of the epidemic, 22q1 still grew steadily, and the growth of franchisees accelerated. Under the influence of the epidemic in mid and late March, the company’s 2022q1 revenue / net profit still achieved a year-on-year increase of 7% / 14%, and the net interest rate increased by 1.0pct to 15.7% year-on-year. In terms of channels, the revenue from direct sales / franchising / e-commerce was 176 / 141 / 293 million respectively, with a year-on-year increase of 4% / 16% / 8% respectively.
It is expected to achieve steady growth in all channels under continuous fine management and store expansion in 22 years. In 22 years, the company’s direct channels will continue to focus on the first and second tier cities and provincial capital cities, and promote growth through the improvement of store efficiency and brand strength; The de stocking cycle of franchise channels has come to an end since 2019. We believe that in 22 years, it is expected to accelerate the pace of opening stores and achieve the sinking goal of third and fourth tier cities; The flow pattern of e-commerce channels has changed greatly. It is expected that the company will ensure the stable growth of revenue and profit with personalized products and refined operation.
Profit forecast and Valuation:
We believe that under the continuous fine management, the company’s overall excellent gross profit margin and turnover performance are expected to continue. Driven by the accelerated growth of franchisees and the steady growth of direct sales and e-commerce, the net profit attributable to the parent company is expected to be 630 / 72 / 820 million in 22 / 23 / 24, with a same increase of 15% / 15% / 14%, corresponding to PE11 / 9 / 8x. As the leader of stable performance, undervalued high score red subdivision, the company maintains the “buy” rating.
Risk tip: the epidemic repeatedly affects terminal retail and the price of raw materials fluctuates
