\u3000\u3 Guocheng Mining Co.Ltd(000688) 179 Shanghai Aladdin Biochemical Technology Co.Ltd(688179) )
Key investment points
Performance overview: the revenue and profit exceeded expectations, and the high investment in 2021 was realized at the beginning of Q1
In 2022, Q1 company’s revenue was 92 million yuan, yoy 46.5 million yuan 49%； The net profit attributable to the parent company was 31.02 million yuan and yoy 54.00 yuan 82%； Net profit of RMB 2.847 million from non parent company 54%, slightly higher than expected. The company’s 01 gross profit margin was 62%, a year-on-year decrease of 2pct. The net interest rate is 33.72%. If the tax rate is reduced, the net interest rate will decrease by about 3PCT compared with the same period in 2021. Cash flow from operating activities -14.08 million, yoy743.00 million 26%, mainly due to the high growth of inventories and prepayments.
Growth: positive month on month growth in the off-season, Q2 pays attention to the rhythm of epidemic recovery
Q1 affected by the Spring Festival holiday, as the traditional off-season of the scientific research service industry, the company still achieved positive growth month on month. We believe that this is in line with our judgment on the company after analyzing the cash flow of the company’s 2021 annual report, “large investment in 2021, flexibility in 2022”. As an inventory driven company, we believe that the company will enter the performance cashing stage in 2022.
Considering that about 20% of the company’s revenue and main storage are located in Shanghai, and the main raw materials are from overseas, we believe that the performance of 2022q2 still needs to track the recovery rhythm of the epidemic. However, due to the company’s inventory driven business model, relatively complete warehouses in North China, Southwest China and South China established in 2021 and sufficient spot rate, it is less affected by the epidemic in the short term, but the impact of the long-term demand side and upstream supply chain still needs to be tracked and evaluated. According to the official official account of the company, on April 24, 2022, the company has entered the white list of key enterprises in Fengxian District of Shanghai to resume work and production, and the Shanghai warehouse can deliver goods normally. In view of the low base of Q2 in 2021 and the judgment of the epidemic situation, we are still optimistic about the high growth of Q2.
Profitability: convertible bond funds are expected to erase the impact of equity incentive on the expense side after they arrive
The gross profit margin of the company decreased 2pct, which was mainly affected by the increase in freight and material costs, which was basically the same as that of last year. Deducting the non net interest rate of 30.73%, which is mainly affected by the increase of R & D expense rate. Based on the contribution of equity incentive, amortization of convertible bonds and subsequent convertible bond interest, we believe that the net interest rate of 2022 company is expected to maintain about 33%.
Cash flow analysis: the investment continues to increase, and the company may enter a virtuous cycle
The net cash flow from operating activities of the company was -14.08 million, yoy 743.5 million 26%, mainly due to the significant growth of inventories and prepayments. We found that the added value of the company’s inventory in a single quarter hit a record high of about 41.45 million; Prepayments increased by 17.24 million. We believe that the company is still in a period of rapid expansion, laying the foundation for long-term high growth in 22-24 years.
Profit forecast and valuation
In view of the higher than expected performance of the company’s revenue and profit side in 2022q1, we raised the net profit attributable to the parent company from 134 million, 179 million and 239 million to 140 million, 188 million and 254 million from 2022 to 2024, corresponding to the closing price on April 25, 2022 and about 34 times of PE in 2022. Maintain the “overweight” rating with reference to the valuation of comparable companies and industry status.
Risk tips
Personnel mobility risk in the process of category expansion; Safety risk in logistics process; The uncertainty risk brought by the new e-commerce model to the company’s brand.
