\u3000\u3 Ping An Bank Co.Ltd(000001) 206 Tianjin Yiyi Hygiene Products Co.Ltd(001206) )
Performance review
On April 25, the company released the annual report and the first quarterly report. The revenue of 21a was 1.31 billion yuan, a year-on-year increase of + 5.6%, and the net profit attributable to the parent company was 114 million yuan, a year-on-year increase of – 41.3%; 1q22 achieved a revenue of 350 million yuan, a year-on-year increase of + 13.9%, and a net profit attributable to the parent company of 18 million yuan, a year-on-year increase of – 44.9%. The performance was slightly lower than the market expectation.
Business analysis
The main pet diaper / diaper business accelerated in the second half of the year, and the rise in raw material prices put pressure on short-term profits. The revenue of 21a pet pad / diaper / non-woven fabric business was 1.16/0.72/0.42 billion yuan, with a year-on-year increase of + 14.5% / + 17% / – 61.7%, of which 2H revenue was + 18.2% / + 28.4% / – 60%, mainly benefiting from the steady increase of overseas pet pad penetration rate, the good pattern and the better growth rate of downstream major customers; The base number of non-woven business is high due to the impact of 20 years of production of epidemic prevention materials, and the revenue volume decreases due to the downward price of non-woven in 21 years; 4q’s overall revenue was + 15.4% year-on-year. From the perspective of profitability, the gross profit margin of 21a is 16.8% (- 9.3pct) and the net profit margin is 8.7% (- 7pct); The gross profit margin of 4q is 11.2% (- 8.1pct) and the net profit margin is 2.9% (- 5.3pct). The main reasons are as follows: 1) the prices of fluff pulp, toilet paper and sap of the company’s main raw materials have increased more; 2) The gross profit ratio of epidemic prevention fabric business decreased by 20 years; 3) In order to expand the Chinese market, we will increase marketing and channel investment in the next 21 years. 21a sales / Management & R & D / finance expense ratio increased from + 0.47 / + 0.64 / – 1.4pct to 1.48% / 3.52% / 0.47% year on year respectively, of which 4q expense ratio was + 0.68/0.79 / – 2.1pct respectively.
1q22: the revenue under the high base is + 13.9%, and the short-term profit is still suppressed by the cost. 1q22’s revenue was + 13.9% year-on-year, growing steadily under the high base. The prices of 1q upstream fluff pulp and SAP materials remained high and volatile, with a gross profit rate of 10.8% (- 7.6pct), a management & R & D / financial expense rate of + 0.69/0.75pct year-on-year and a net profit rate of 5.2% (year-on-year -5.6pct).
Overseas business benefited from the centralized pattern and upgrading of product structure, and Chinese business was actively explored. In June, the new production capacity of wood pulp was put into operation, the price of wood pulp was corrected, the cost pressure is expected to weaken, and it is optimistic about profit restoration. The company is deeply bound with high-quality customers such as Petsmart, the product structure is optimized, and the overseas profitability is expected to be improved. China relies on its own brand “Leshi pet” to actively explore the market, and the medium and long-term growth logic deserves attention.
Profit forecast and investment suggestions
In the medium and long term, we are optimistic about the cost advantage brought by the scale effect of the company in the field of pet hygiene products and the active development of Chinese business. It is predicted that the company’s EPS in 22-24 years will be 1.25, 1.58 and 1.84 yuan respectively, and the current share price will be 29, 23 and 20 times of PE in 22-24 years, maintaining the “overweight” rating.
Risk tips
Risk of fluctuation of gross profit margin caused by sharp fluctuation of upstream raw material price; The risk that the project under construction cannot achieve the expected income; In May 22, the ban on IPO restricted shares was lifted; Exchange rate fluctuation risk
