\u3000\u3 Guocheng Mining Co.Ltd(000688) 793 Shenzhen Breo Technology Co.Ltd(688793) )
Event: in 2021, the company achieved a revenue of 1.19 billion yuan, a year-on-year increase of 43.9%; The net profit attributable to the parent company was RMB 90 million, with a year-on-year increase of 29.9%. Q4 achieved a revenue of 380 million yuan in a single quarter, a year-on-year increase of 23.8%; The net profit attributable to the parent company was 30 million yuan, a year-on-year decrease of 31.8%. In the first quarter of 2022, the company achieved a revenue of 250 million yuan, a year-on-year increase of 15.3%; The epidemic affected the offline passenger flow, and the company lost 9.89 million yuan in a single quarter. In addition, the company plans to distribute a cash dividend of 6 yuan for every 10 shares to all shareholders.
The product matrix continues to enrich and open up a new track of moxibustion series. The company’s revenue source is mainly Intelligent Portable Massager. In 2021, it achieved sales of 1.13 billion yuan, accounting for 94.9% of its main revenue, with a year-on-year increase of 36.7%. During the reporting period, the company launched a new generation of main series products such as head massager dream6 and neck massager neckc2, and continuously iterated and upgraded to respond to the changes in the needs of modern consumers in time. Among them, the market share of the company’s neck massager products has improved significantly. The market share of the company’s neck massager products on tmall platform has increased from 4.0% in 2020 to 9.5% in 2021. In addition, the company also innovatively launched moxibustion series products such as Jiang Xiaozhu. After being launched in the third quarter of 2021, moxibustion series products have aroused good repercussions in the market. In 2021, the sales of moxibustion series products of the company reached 60.245 million yuan, accounting for 5.1% of the company’s main business income.
Wuxi Online Offline Communication Information Technology Co.Ltd(300959) two wheel drive, and the marketing mode keeps pace with the times. The company actively arranges e-commerce channels and promotes the development of Wuxi Online Offline Communication Information Technology Co.Ltd(300959) integration. In 2021, the online revenue was 680 million yuan, with a year-on-year increase of 58.4%, of which the growth rate of online direct sales channels reached 61.9%. In terms of offline channels, the company timely optimized the structure of offline stores and increased the proportion of stores in shopping centers. By the end of 2021, the total number of Direct stores of the company had reached 186, including 108 stores in shopping centers and 78 stores in transportation hubs. In addition, the company continues to explore and improve cooperation modes such as Ka chain, agent franchise and channel distribution, so as to penetrate into the sinking market and cover more consumer groups. In terms of marketing methods, the company takes new media platforms such as Tiktok, wechat and xiaohongshu as the main channels for content and short video marketing promotion. At the same time, with the help of innovative marketing cooperation methods such as KOL live broadcast, the company further enhances its marketing momentum, defines its product positioning and enhances its brand influence.
Profitability has declined. In 2021, the company’s comprehensive gross profit margin was 56.7%, a year-on-year decrease of 1.6pp. We speculate that the main reason for the decline of the company’s gross profit margin is the continuous rise in the price of raw materials combined with the increase in the proportion of the company’s OEM business with low gross profit margin. In terms of expense rate, the company’s sales expense rate / management expense rate / financial expense rate are 40.8% / 7.4% / 0.6% respectively, with a year-on-year change of – 0.6pp / – 0.5pp / + 0.4pp, and the company’s expense rate is relatively stable. Overall, the company’s net interest rate was 7.7%, a year-on-year decrease of 0.8pp.
Under the disturbance of the epidemic, the growth rate slowed down and short-term profits were under pressure. In terms of channels, the company continued to strengthen the expansion of online channels and new media, and online sales continued to grow rapidly. Did Q1 achieve a revenue of 160 million yuan, a year-on-year increase of 48.8%; Disturbed by the epidemic, the company’s offline store traffic decreased, and the offline revenue of Q1 was 80.064 million yuan, a year-on-year decrease of 15.4%. In terms of profit performance, the gross profit margin / net profit margin of the company were 53.9% / – 4.02% respectively, with a year-on-year decrease of 2.8pp/9.1pp. We speculate that on the one hand, the continuous rise of raw material prices has affected the performance of the company’s gross profit margin; On the other hand, the growth of revenue slowed down, but the fixed expenses such as store rent did not decrease, resulting in an increase in the expense rate of the company during the reporting period. The company’s sales expense ratio / management expense ratio was 45.7% / 10.6%, with a year-on-year increase of 3.6pp/2.3pp. Overall, the company’s Q1 profit performance is under pressure.
Equity incentive shows confidence in long-term development. The company launched the draft of equity incentive and plans to grant 1.77 million restricted shares to 149 people, including senior executives and core technicians, at the price of 27.4 yuan / share, accounting for 2.9% of the total shares of the company. The assessment requirements are based on 2021, and the compound growth rate of the company’s revenue and performance from 2022 to 2024 is required to be no less than 30%. The corresponding revenue from 2022 to 2024 is 15.5/20.1/16.1, and the performance is 120.0/1.6/200 million yuan respectively. The company has set high unlocking conditions, which fully demonstrates the confidence of the company in long-term operation.
Profit forecast and investment suggestions. The company has obvious advantages in the medium and high-end market and will steadily improve its products and channels in the future. It is expected that the company’s EPS will be 1.95/2.59/3.33 yuan from 2022 to 2024 respectively, and the net profit attributable to the parent company will maintain a compound growth rate of 31% in the next three years and maintain the “hold” rating.
Risk tip: the price of raw materials fluctuates sharply, the epidemic repeatedly affects offline sales, and the market competition intensifies the risk.
