\u3000\u3 Jiangsu Eastern Shenghong Co.Ltd(000301) 009 Hangzhou Coco Healthcare Products Co.Ltd(301009) )
Event:
The company released the annual report of 2021: the annual revenue of 2021 was 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 net profit deducted from non parent company was 33 million yuan, a year-on-year decrease of 83.42%; The basic earnings per share is 0.17 yuan.
The company released the first quarterly report of 2022: the revenue of 2022q1 was 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 net profit deducted from non parent company was RMB 01 million, a year-on-year decrease of 96.31%.
Guoyuan view:
The demand for infant care weakened, and adult and pet care increased steadily
In 2021, the company’s performance fell sharply. Excluding the impact of income from epidemic prevention materials such as masks, the revenue was -19.01% year-on-year, mainly due to the continuous decline in the number of newborns and the shrinking demand in the infant care market. In terms of products, the revenue of infant care products, adult care products and pet care products accounted for 52% / 39% / 7% respectively in 21 years, with a year-on-year increase of – 34.81% / + 8.07% / + 13.86%; In terms of sales mode, private brands and ODM accounted for 33% / 66% respectively, with a year-on-year decrease of – 12.05% / – 33.81%. Private brands dominated by adult incontinence products decreased slightly.
The rise in costs has dragged down the gross profit margin, the sales expenses have increased rapidly, and the financial expenses have decreased
The gross profit margins of 21q4 and 22q1 were 7.56% / 12.07% respectively, with a year-on-year increase of – 16.4 / – 13.3pct, mainly due to the increase of raw material costs and transportation expenses. The company’s expense rate during 2021 was 14.40%, with a year-on-year increase of + 3.91pct; Among them, the sales expense ratio was 7.64%, with a year-on-year increase of + 3.64pct, mainly due to the increase of marketing expenses and human resources costs; The management expense ratio was 3.13%, with a year-on-year increase of + 1.61pct, which was mainly due to the cancellation of tax and social security benefits and the increase of listing expenses and depreciation expenses; The financial expense ratio was -0.53%, with a year-on-year increase of -1.90pct, mainly due to the small exchange loss and the increase of interest income caused by the raised funds; The R & D expense rate was 4.15%, with a year-on-year increase of + 0.55pct, indicating that the company attaches importance to developing new products to meet diversified needs.
Elderly care brand is in the ascendant
Under the trend of aging population, the market penetration of China’s adult incontinence products may increase year by year. The company ranks first in the sales share of China’s adult incontinence products market in 2020, and is expected to benefit from the growth of elderly care demand in the future. The company adheres to the “independent brand + ODM” two wheel drive development mode and continues to improve “reliability!” In terms of self owned brands and products, aiming at the awakening consumption awareness of mild incontinence groups, we launched mild incontinence products, invisible absorbent towels and invisible travel pants specially designed for Asian women, and expanded product categories; In terms of marketing, we launched brand super symbols and dynamic elderly IP image to lead consumer education in the field of incontinence products; In terms of channels, key offline channels such as stores around the hospital, OTC, nursing homes and government procurement will be further penetrated in 2022. At the same time, the company’s fund-raising project smart factory will be put into operation in 2022, and the leading position in the industry is expected to continue to strengthen.
Investment advice and profit forecast
The penetration rate of adult incontinence products still has great room for improvement. As a leader in the industry, the company will benefit from the sales growth of its own brands dominated by adult care products. We estimate that the company’s revenue from 2022 to 2024 will be 1.393/16.12/1.846 billion yuan respectively, the net profit attributable to the parent company will be 0.76/1.50/216 billion yuan, the EPS will be 0.28/0.55/0.79 yuan / share, and the corresponding PE will be 51.62/26.26/18.23 times. Considering the short-term pressure on performance and the uncertainty of the elimination time of external factors, it will be temporarily lowered to the “overweight” rating.
Risk tips
Price fluctuation of raw materials; Too many downstream customers; Industry competition intensifies.
