\u3000\u3 Guocheng Mining Co.Ltd(000688) 793 Shenzhen Breo Technology Co.Ltd(688793) )
In 2021, the company achieved a revenue of 1.190 billion yuan, yoy + 43.93%, and a net profit attributable to the parent company of 92 million yuan, yoy + 29.92%; Among them, 21q4 achieved a revenue of 376 million yuan, yoy + 23.77%, and the net profit attributable to the parent company was 26 million yuan, yoy-31.78%. In 2022q1, the company achieved a revenue of 248 million yuan, yoy + 15.29%, and a net profit attributable to the parent company of – 10 million yuan, yoy-188.84%.
Key points supporting rating
Category extension has achieved remarkable results, and equity incentive shows confidence. 1) In terms of products, the company adheres to product innovation and continues to launch a new generation of main series products such as head massager dream 6 and neck massager neck C2. In 2021, the revenue of head / neck / eye / scalp is yoy + 11.11% / 50.19% / 19.35% / 1.60%; At the same time, continue to expand moxibustion series products represented by intelligent moxibustion box. In 2021, the company’s moxibustion series products accounted for more than 5% of its revenue. 2) In terms of channels, the company actively deployed tmall, jd.com and other mainstream e-commerce platforms, strengthened cooperation with new media channels such as Tiktok, and grasped the traffic entrance. According to the official flag war report, in 2021, the online sales of double 11 Shenzhen Breo Technology Co.Ltd(688793) Shenzhen Breo Technology Co.Ltd(688793) ; In 2021, the company’s online channel revenue was yoy + 58.44%, accounting for 57.05% of revenue. 22q1 online channel maintained rapid growth, yoy + 48.77%. The company continued to optimize the layout of offline Direct stores, increase the proportion of mall stores, carry out diversified marketing methods, and actively overcome the adverse effects of covid-19 epidemic. By the end of 2021, the company had a total of 186 Direct stores, including 108 stores in shopping centers and 78 stores in transportation hubs; The company continues to explore and improve cooperation modes such as Ka chain, agent franchise and channel distribution, so as to penetrate into the sinking market and cover more consumer groups. In 2021, the company’s offline revenue was yoy + 26.05%. The 22q1 epidemic had a great impact on offline channels, and the revenue was yoy-15.38%. 3) The company has issued an equity incentive plan. Based on 2021, the growth rates of revenue and net profit from 2022 to 2024 will not be less than 30.00%, 69.00% and 119.70% respectively. The incentive objects are executives and technical backbones of the company.
The cost of raw materials is high, 22q1 is affected by the epidemic, and the performance is under pressure in the short term. The gross profit margin of 21q4 is 50%, year-on-year -7.61pct, and the net profit margin is 6.97%, year-on-year -5.54pct; 22q1 company’s gross profit margin was 53.92%, year-on-year -2.77pct, and net profit margin was -4.02%, year-on-year -9.15pct. The cost of raw materials is rising, the epidemic situation in China is repeated, and the operation of offline Direct stores is blocked, but the expenses such as store rent and personnel cost are not reduced, affecting the profitability; At the same time, online competition intensifies and cost investment increases.
Valuation
Considering the growth of the massage small electricity industry and the impact of the epidemic on the operation of offline stores, combined with the company’s equity incentive objectives, we expect the company’s EPS to be 1.94 yuan / 2.73 yuan / 3.68 yuan from 2022 to 2024, corresponding to a P / E ratio of 22.7 times / 16.2 times / 12.0 times, maintaining the buy rating.
Main risks of rating
The impact of repeated outbreaks on offline operations; The risk of intensified market competition; Raw material price fluctuation risk, etc
