\u3000\u3 Shengda Resources Co.Ltd(000603) 657 Jinhua Chunguang Technology Co.Ltd(603657) )
Event: in Q1 2022, the company achieved an operating revenue of 288 million yuan, a year-on-year increase of + 14.93%, and a net profit attributable to the parent company of 15 million yuan, a year-on-year increase of – 53.56%.
Rapid growth of complete machine: from the perspective of business, we expect that the revenue of 22q1 complete machine of the company is 120 million (only about 20 million in the same period last year, and the revenue of 21q4 is 140 million); The traditional business was 170 million, with a year-on-year increase of about – 27%. The whole machine business of the company has grown rapidly, and the revenue has basically reached the 21q4 level including big promotion. According to the data of the business consultant, the turnover of the company’s OEM land washing machine products during the promotion of 22q1 and 21q4 was 122.3% month on month, and the Gmv of the land washing machine was nearly 3000W during the activity of Tiktok in March. The sales volume of Xiaomi floor washer product 22q1 is 16.36 million yuan, reaching half the level of 21q4gmv. As Q1 is the off-season of clean appliances, with the second quarter entering the mid year promotion of clean appliances, we expect the whole machine business of the company to continue to grow rapidly. The decline of traditional business is mainly due to the impact of the high demand of the clean electrical appliance industry benefiting from the epidemic in 21 years and the decline of the customer demand for hoses and accessories under the high base.
The whole machine profit increased month on month: the company’s Q1 gross profit margin in 2022 was 15.45%, year-on-year -10.57pct, and the net profit margin was 6.14%, year-on-year -6.6pct. In terms of business, the gross profit margin of the whole machine is about 8.5%, and that of traditional business is about 20%. The decline in the company’s net profit margin was mainly due to the year-on-year decline in the revenue of hose and accessories business with high original profit margin. The profit level of the whole machine has increased significantly. According to the reduction of minority shareholders’ profits and losses in the annual report of 21 years and the quarterly report of 22q1, the net interest rate of Suzhou shangteng, a subsidiary of the whole machine business of the company, has reached 6.8%, and the net interest rate of 21a Suzhou shangteng is a loss.
Expand personnel scale and increase investment: the company’s Q1 sales, management, R & D and financial expense rates in 2022 were 1.53%, 5.94%, 3.04% and 0.91% respectively, with a year-on-year increase of + 0.59, – 2.56, + 0.23 and + 1.48pct. The company expanded the scale of complete machine business, and the personnel of subsidiaries increased significantly, from 925 in 2020 to 1287 in 21, resulting in a corresponding increase in management expenses.
Short term macro factors led to the increase of complete machine inventory: the company’s 2022q1 inventory was 287 million yuan, a year-on-year increase of + 63.06%. The company’s inventory has increased significantly, and we expect most of them to be the inventory goods of OEM machines. We believe that on the one hand, due to the epidemic in China, March has a certain impact on the company’s logistics and transportation, on the other hand, due to the extension of the shipping schedule of overseas routes, some products in the shipping schedule will be recorded as inventory. At the same time, we expect that the decline of overseas demand will inhibit the progress of overseas brand delivery to a certain extent.
Abundant cash flow: the net cash flow from the company’s Q1 operating activities in 2022 was 105 million yuan, a year-on-year increase of + 260.07%, of which the cash inflow from the sale of goods and the provision of labor services was 387 million yuan, a year-on-year increase of + 51.02%. The company has sufficient cash flow, which is mainly due to the increase of orders for the whole vacuum cleaner OEM business and the increase of accounts receivable.
Investment suggestion: at present, the company binds multiple core customers, and there is a certain guarantee for the future order volume. At the same time, the company actively expands the scale of production capacity to ensure sufficient production capacity to meet the flexible order demand of customers. In the short term, the company’s revenue performance fluctuates due to macro environmental factors. In the future, it is expected that the company’s operation will gradually improve with the improvement of macro conditions month on month. According to the first quarterly report of the company, we have reduced the growth rate and gross profit margin of the company’s traditional business, and increased minority shareholders’ equity. It is estimated that the net profit of the company from 2022 to 2024 will be 150 / 206 / 249 million yuan respectively (the previous value was 174 / 228 / 284 million yuan); The corresponding dynamic valuations are 13.9x/10.2x/8.4x respectively. Downgrade to “overweight”.
Risk warning: raw material price fluctuation risk; Market competition risk; Risk of substitute products; exchange-rate risks; The OEM penetration rate is lower than expected.
