\u3000\u3 Shengda Resources Co.Ltd(000603) 987 Shanghai Kindly Enterprises Development Group Co.Ltd(603987) )
Event overview
On April 25, the company released its report for the first quarter of 2022, achieving an operating revenue of 867 million yuan, a year-on-year increase of 28.81%, a net profit attributable to the parent company of 71 million yuan, a year-on-year increase of 55.67%, and a rapid growth in performance.
The performance increased rapidly and the expense rate decreased. In the first quarter of 2022, relying on the collaborative advantages of production bases such as Shanghai, Zhuhai and Wenzhou, the company continued to promote capacity expansion, strengthen low-cost advantages, and superimpose the foundation of continuous development of overseas markets for many years in the early stage. It is expected that there is a strong demand for new products such as safety syringes / needles and pre filled syringes, which will promote the continuous improvement of performance. At the same time, the company achieved a gross profit margin of 34.65%, down 1.86pct month on month. However, the company reasonably controlled various expenses, and the overall expense rate reached 20.99%, down 0.08pct month on month, down for three consecutive months.
Innovative products are gradually implemented to promote performance shift growth. In October 2021, the company was granted the first registration certificate of class III medical devices for beauty needles in China. Under the background of promoting the standardization of medical and beauty devices in China, the company's one-time injection beauty bag is expected to help accelerate the shift of performance based on the first mover registration advantage and solid sales network. In addition, new products such as safe insulin pen needle, safe indwelling needle and blood return needle are expected to be listed one after another this year, laying a solid foundation for product iteration and upgrading.
The impact of the epidemic is controllable, and some delayed orders are expected to be confirmed in the second quarter. Since the middle and late March, covid-19 epidemic broke out in Shanghai, which had a certain impact on the production and operation of the company. However, with the support of the government, the company has actively completed the supply of medical materials in Shanghai and reasonably arranged the production capacity and logistics scheduling. We expect factories in Zhuhai, Wenzhou and Beilun River to meet the needs of domestic trade business in an orderly manner. In addition, as one of the key production list enterprises of the Ministry of industry and information technology, the company has received strong support from the government, and the impact of the epidemic is generally controllable. Since the overseas business is mainly order system, the orders delayed by the epidemic are expected to be centrally confirmed in the second quarter.
Investment advice
We expect that the net profit attributable to the parent company in 202224 will be RMB 391 / 486 / 597 million, with a year-on-year increase of 34.2% / 24.3% / 22.7%, corresponding to EPS of 0.89/1.10/1.35, and PE valuation of 22-24 will be 15.57/12.52/10.21 times. We continue to be optimistic about the upgrading and expansion of the infusion and puncture industry. As an industry leader, the company is expected to enjoy the dividends of industrial expansion and upgrading by virtue of integrated industrial chain, low cost advantage and continuous product innovation. At the same time, with the help of industrial layout, the company extends its tentacles to high growth segments, which is expected to further consolidate its moat and improve its performance. Maintain the "buy" rating.
Risk tips
Risks related to industry supervision, product liability risk, exchange rate change risk, dealer management risk, product R & D risk, etc
