\u3000\u3 Bohai Water Industry Co.Ltd(000605) 009 Hangzhou Haoyue Personal Care Co.Ltd(605009) )
Performance review
The company released the performance of 2021 and 1q22 on April 25. The company achieved a revenue of 2.462 billion yuan (- 4.98%) in 21 years; The net profit attributable to the parent company was 363 million yuan (- 39.75%). 1q22 achieved revenue of 515 million yuan (- 2.8%); The net profit attributable to the parent company was 55 million yuan (- 37.83%), and the performance was under pressure in the short term due to the impact of bulk price increases.
Business analysis
The revenue growth of baby diapers slowed down, and the rise of raw materials + intensified competition led to pressure on short-term profits. 1) Category: affected by the weak downstream demand and the reduction of epidemic prevention materials, the revenue of 21a baby hygiene products / adult hygiene products / non absorption and other products was 1.76/5.8/0.6 billion yuan, with a year-on-year revenue of + 5.6% / – 5.1% / – 77%, of which 2h21 revenue was + 20.7% / – 5.8% / + 159%, and the order volume of 4q downstream brands recovered, with a year-on-year revenue of + 47.5%. 2) Sub regions: 21a domestic / overseas revenue was 2.14/270 billion yuan, with a year-on-year increase of – 5.4% / – 6.9%, of which 2H revenue was + 15.3% / + 6.6%. From the perspective of profitability, the gross profit margin of 21a is 26.3% (- 10.6pct) and the net profit margin is 14.7% (- 7pct). The reasons are as follows: 1) the main raw materials sap and non-woven fabrics are petroleum derivatives. Since 2q, the price of raw materials has risen rapidly, and the competition at the OEM end is fierce under weak demand, which affects the cost transfer; 2) The proportion of epidemic prevention materials with high gross profit decreased. The rates of 21a sales / Management & R & D expenses were 3.7% / 5.7% respectively, with a year-on-year increase of + 0.87 / + 0.41pct.
1q22: downstream brands go to the warehouse, resulting in pressure on revenue, and short-term profits are still affected by high raw material prices. 1q22’s revenue was – 2.8% year-on-year. Although the upstream SAP material price of 1q was reduced, it was at a high level, with a gross profit margin of 22.2% (year-on-year – 8.4pct), a sales / Management & R & D / financial expense ratio of – 1.2 / + 0.28/0.24pct year-on-year respectively, and a net profit margin of 10.7% (year-on-year – 6pct).
Expand customers + innovation driven + overseas extension, clear medium and long-term development path, and share repurchase shows confidence. The uncertainty of short-term costs still disturbs the profitability, but the company has prominent core advantages in the two categories of baby diapers and menstrual pants, which is expected to maintain growth beyond the industry, and is expected to accelerate the launch of new baby diapers, adult menstrual pants and overseas private brands in 22 years.
Profit forecast and investment suggestions
We are optimistic about the company’s cost leadership and technical advantages in the field of diaper OEM. It is predicted that the company’s EPS in 22-24 years will be 2.59, 3.09 and 3.57 yuan respectively. The current share price corresponds to 14, 11 and 10 times of PE in 22-24 years, and is rated as “overweight”.
Risk tips
The risk of high concentration of downstream customers; Risk of rising raw material prices; The risk of gross profit margin decline due to fierce market competition; In January 22, Wenzhou Outai, the shareholder of the company, issued a shareholding reduction plan, which accounted for no more than 3% of the total share capital.
