\u3000\u3 Shengda Resources Co.Ltd(000603) 195 Gongniu Group Co.Ltd(603195) )
Event overview
Gongniu Group Co.Ltd(603195) released the first quarter report of 2022: in 2022q1, the company achieved a revenue of 3.078 billion yuan, a year-on-year increase of + 19.58%; The net profit attributable to the parent company was 641 million yuan, a year-on-year increase of + 5.68%; The net profit attributable to the parent company after deduction was 562 million yuan, a year-on-year increase of + 0.70%. The revenue side has performed well, and the growth rate has increased quarter on quarter since 2021q3, while the profit side is affected by many factors such as the epidemic and the rise of raw material prices, and the growth rate is slower than the revenue side. In terms of cash flow, the net cash flow from operating activities in 2022q1 was 434 million yuan, a year-on-year increase of + 21.83%, and the cash flow return performance was good.
Analysis and judgment:
Revenue side: revenue growth increased month on month and performed well.
Under the background of repeated epidemic and high base in the same period of last year, 2022q1 company’s revenue and net profit attributable to parent company increased by 19.58% and + 5.68% respectively year-on-year. Among them, the growth rate of revenue side has increased quarter on quarter since 2021q3 (21q3 + 5.08%, 21q4 + 16.13%, 22q1 + 19.58%), which has performed well. We expect that it is mainly due to the company’s active promotion of product innovation and upgrading in the fields of smart home, new energy vehicles and so on, In addition, the two marketing systems of TOC and tob at the channel end have been further established, and the coordination and complementarity strategies of offline hardware channels, decoration channels, digital channels and online e-commerce channels have been clear, so as to speed up the progress of all channel expansion, make remarkable marketing changes, and bring the overall income of the company to continue to rise; The growth rate of the profit side is lower than that of the income side. We expect that the price of raw materials is high, the cost of the company is under pressure, and the profit of main businesses has declined.
Profit side: profitability is under pressure in the short term, and the expense rate increases slightly during the period.
In terms of profitability, the gross profit margin and net profit margin of 2022q1 company are 34.47% and 20.80% respectively, with a year-on-year decrease of -3.30pct and -2.78pct respectively. We expect that the main reason is the high price of bulk raw materials such as copper. According to wind, the price of copper in 2022q1 (taking the copper price index as an example) is + 0.45% month on month, + 14.49% year-on-year, and the price of plastic (taking the China plastic city price index as an example) is – 4.21% month on month, with a year-on-year decrease of -0.77%, Although the market price of plastics fell slightly, the price of copper continued to rise, and the cost pressure of raw materials was still high. In addition, the company launched a number of new products around the fields of smart home and new energy vehicles in 2021. The new products are still in the investment period, which may have a certain impact on the overall profitability. In terms of period expense rate, the period expense rate of 2022q1 company was 11.94%, with a year-on-year increase of + 1.30pct, of which the sales expense rate, management expense rate, R & D expense rate and financial expense rate were 5.25%, 3.93%, 3.64% and – 0.88% respectively, with a year-on-year increase of + 0.62pct, + 0.40pct, + 0.55pct and – 0.27pct respectively. The period expense rate increased slightly, mainly reflected in the sales expense rate, management expense rate and R & D expense rate.
Investment advice
On the basis of consolidating the field of converters, the company has successively copied its competitive advantages to new business fields such as wall opening, LED lighting and digital accessories, and gradually moved forward to a civil electrical giant. Maintaining the previous profit forecast, it is estimated that the operating revenue from 2022 to 2024 will be RMB 139.27/16.63/18.184 billion respectively, and the EPS will be RMB 5.11/5.92/6.74 respectively. According to the closing price of RMB 126.75/share on April 26, 2022, the corresponding PE will be 25 / 21 / 19 times respectively. We continue to be optimistic about the strong moat built by the company’s “brand power + channel power + management power” and maintain the “buy” rating.
Risk tips
New business expansion is less than expected risk; Risk of substantial price increase of raw materials; The risk of intensified industry competition; The prosperity of real estate is less than the expected risk; Short term epidemic impact.
