\u3000\u3 Guocheng Mining Co.Ltd(000688) 793 Shenzhen Breo Technology Co.Ltd(688793) )
Event: the company released the annual report of 2021 and the first quarterly report of 2022. In 2021, the annual operating revenue was 1.190 billion yuan, a year-on-year increase of + 43.9%; The net profit attributable to the parent company was 92 million yuan, a year-on-year increase of + 29.9%; It is proposed to distribute a cash dividend of 6 yuan (including tax) for every 10 shares. In 2022q1, the operating revenue was 248 million yuan, a year-on-year increase of + 15.3%; The net profit attributable to the parent company was -9.8898 million yuan, compared with 111327 million yuan in the same period last year.
Comments:
The company’s massage products grew steadily, and the emerging categories performed well. By category, the revenue of neck / eye / head / scalp massager products in the company’s intelligent portable massager products was 3.10/2.99/0.91/122 million yuan respectively, with a year-on-year increase of + 50.2% / + 19.4% / + 11.1% / + 1.6% respectively. In 2021, the company opened a new track of moxibustion series, and the revenue of moxibustion products was 60 million yuan. From the perspective of different channels, the company achieved online / offline revenue of 683 / 439 million yuan in 21 years, with a year-on-year increase of + 58.4% / + 26.1% respectively, accounting for 57.5% / 37.0% of the total revenue respectively. Due to the great impact of the epidemic on offline stores during the year, the company actively deployed e-commerce platforms by means of KOL live broadcast, and the scale of online revenue increased.
Affected by the epidemic and the rising cost of raw materials, the profit side of 2022q1 is under pressure. Affected by the rise in raw material prices, the company’s gross profit margin in 2021 was – 1.6pct to 56.73% year-on-year, and the sales / management / R & D expense rate was – 0.7pct / – 0.03pct / – 0.5pct to 40.75% / 3.43% / 3.97% respectively. Under the comprehensive influence, the annual net profit margin was – 0.8pct to 7.72% year-on-year. The gross profit margin in 2022q1 was 53.92%, with a year-on-year ratio of -2.8pct and a month on month ratio of + 3.9pct; The company’s direct sales accounted for a large proportion. In the first quarter, the offline stores were seriously impacted by the epidemic, resulting in the loss of the company’s profit side. In the future, with the mitigation of the epidemic, the company’s profitability is expected to rebound.
The restricted stock incentive plan for 2022 was released to demonstrate the company’s confidence in long-term development. The company announced that it plans to grant 149 incentive objects with a total of 1.77 million shares. The performance assessment target for the first time is based on the revenue and net profit in 2021. The growth rates of revenue and net profit in 20222024 are not less than 30% / 69% / 119.7% respectively, that is, the compound growth rate of revenue and net profit in 20222024 is not less than 30%. Under the background of overall pressure on China’s consumption environment, the performance assessment target of this incentive plan is high and the assessment period is long, It may play a good role in underpinning the company’s future business performance and demonstrate the company’s confidence in long-term development.
Investment suggestion: small massager is a leading brand in the industry, with perfect omni-channel layout and strong product power. It maintains the rating of “overweight”. Considering the short-term “covid-19” epidemic disturbance, we lowered the company’s profit forecast. It is estimated that the company’s net profit attributable to the parent company from 2022 to 2024 will be 121 / 158 / 206 million yuan respectively (the original predicted value of net profit attributable to the parent company in 2022 / 2023 is 172 / 270 million respectively), corresponding to 23 / 17 / 13 times of the current market value PE respectively, maintaining the “overweight” rating.
Risk tip: real estate policy regulation risk, repeated epidemic situation in China, fluctuation of raw material price, etc.
