\u3000\u3 Shengda Resources Co.Ltd(000603) 195 Gongniu Group Co.Ltd(603195) )
Event: Gongniu Group Co.Ltd(603195) released the first quarterly report of 2022. The company achieved revenue of 3.08 billion yuan in the first quarter of 2022, yoy + 19.6%; Achieved a performance of 640 million yuan, yoy + 5.7%. Driven by diversified businesses, bull Q1's revenue maintained a rapid growth trend, and its profitability improved month on month compared with Q4.
The revenue of bull Q1 maintained a rapid growth trend in the single quarter: the revenue growth rate of bull 2022q1 in the single quarter was higher than 2021q4 + 3.5pct, and the revenue of bull 2022q1 increased by 38.4% compared with 2019q1. We believe that the rapid growth of bull's income is mainly due to: 1) the company continues to promote the monopoly and integration of decoration channels. By the end of 2021, bull has successfully developed more than 18000 exclusive outlets, and multi category sales collaborative sales has achieved good results in Q1; 2) The converters are mostly used for temporary power supply scenarios. The increase of temporary power supply scenarios during the epidemic has stimulated the demand for converters to a certain extent.
The gross profit margin of bull Q1 increased month on month: the gross profit margin of bull 2022q1 was 34.5%, with a month on month ratio of 2021q4 + 2.2pct, a year-on-year ratio of 2021q1-3.3pct. Q1 gross profit margin increased month on month. We think it may be because the price of raw materials remained high, and the company adjusted the product price. The price of copper, the company's main raw material, increased by 7.5% month on month (closing price of LME three-month copper futures) in 2022q1 compared with 2021q4, and the price of plastics decreased by 4.1% month on month (China Plastics index).
The profitability of bull Q1 in a single quarter decreased year-on-year: the net profit margin of bull 2022q1 was 20.8%, year-on-year -2.7pct, and the net profit margin deducted was 18.3%, year-on-year -3.4pct. The company's profitability decreased year-on-year, mainly because: 1) the price of raw materials remained high, and the cost pressure was greater than that in the same period last year; 2) The proportion of LED lighting and household appliances business income with low gross profit margin increased; 3) The company actively promoted channel reform, promoted multi category collaborative sales, and increased the investment of sales and management expenses. In 2022q1, the sales expense rate was + 0.6pct year-on-year, and the management expense rate was + 0.4pct year-on-year.
Bull Q1 net cash flow from operating activities increased year-on-year: Bull 2022q1 net cash flow from operating activities was 430 million yuan, a year-on-year increase of + 80 million yuan. The company's cash flow is in good condition. The cash received from selling goods and providing labor services in Q1 was 3.81 billion yuan, yoy + 23%, with a growth rate higher than that of revenue. The company's Q1 contract liabilities were 730 million yuan, a year-on-year increase of + 320 million yuan, reaching the highest value since the company was listed. The channel payment was relatively positive, reflecting the downstream demand.
Investment suggestion: as the leader of converter and wall opening, the company will continue to deepen the channel layout and enrich the SKUs of each production line, which is expected to increase the market share in more subdivided fields and achieve long-term stable growth. We expect the Bulls' EPS to be 5.06/6.04 yuan from 2022 to 2023, maintaining the Buy-A investment rating.
Risk tip: the sharp rise in the price of raw materials leads to the decline of profitability
