\u3000\u300 China Vanke Co.Ltd(000002) 6 Fiyta Precision Technology Co.Ltd(000026) )
Key elements of the report:
On April 22, 2022, the company released the performance report of Q1 in 2022. The announcement showed that in 2022q1, the operating revenue was 1.174 billion yuan (yoy-14.84%), the net profit attributable to the parent company was 86 million yuan (yoy-26.96%), and the net profit not attributable to the parent company was 84 million yuan (yoy-25.95%).
The consumption of medium and high-end watches in China continues to be hot, and the decline of Q1 income is viewed rationally. Affected by covid-19 epidemic, the consumption passenger flow of terminal shopping malls decreased sharply, and the Q1 revenue of the company declined due to the high base of Q1 last year. The short-term income decline should be viewed rationally, and attention should be paid to the continuity of demand side consumption return and the growth space of medium and high-end watch consumption in Chinese Mainland. According to the latest data from the Swiss Watch Industry Federation, the export volume of Swiss watches to Chinese Mainland in February 2022 increased by 22.4% year-on-year. After nearly two years of explosive growth after the epidemic, the mainland’s local high-end watch market is not only expanding in scale, but also striving to achieve a more stable and benign growth situation. At present, due to the impact of the epidemic, the market environment is still severe, and short-term fluctuations are inevitable. However, in the long run, we are firmly optimistic about the consumption of medium and high-end watches in the future.
The gross profit margin continued to rise, and the sales expense rate increased significantly. Q1 achieved a gross profit margin of 38.21%, a year-on-year increase of 0.89pcts. The sales / management expense ratio was 21.93% / 4.72%, an increase of 1.56 PCTs / 0.59 PCTs respectively compared with Q1 last year. Overall, the company’s Q1 net interest rate was 7.36%, down 1.22pcts year-on-year. In addition, the company’s inventory turnover rate was 0.35 times, a decrease of 0.09 times compared with the same period of the previous year. The slight decline in profitability and operating efficiency drove the company’s q1roe to decrease by 1.31pcts to 2.84%.
Under the epidemic situation, optimize the channel structure and gradually expand the proportion of online business. The company has steadily promoted the entry of offline shopping center stores. Last year, it opened 100 self operated stores in the shopping center, closed some loss making stores, further optimized the cost structure, continued to develop online business and digital new retail business, and gradually expanded the proportion of online business. In terms of duty-free channels, the company’s own brand basically entered all duty-free channels in Hainan. On this basis, the company completed the establishment of a wholly-owned subsidiary in Hainan last year, and actively promoted the cooperation between famous watch business and duty-free channels. The recurrence of the current epidemic has a great impact on the passenger flow of Hainan tourism market. The local sales of private brands fluctuate, but the products in the same price segment have maintained a good level.
Deepen the core DNA of aerospace and practice the “big country brand strategy” Fiyta Precision Technology Co.Ltd(000026) insists on helping China’s manned space industry. In the missions of Shenzhou 12, Shenzhou 13 and the space station, Fiyta Precision Technology Co.Ltd(000026) has delivered three types of space watches, which respectively undertake three important timing functions: leak detection timing of spacesuit in the cabin, work auxiliary timing and redundant timing of spacewalk. During the return mission of Shenzhou 13, the spacesuit watch in the cabin provided the astronauts with the function of leak detection and timing. As the leader of Chinese watches, Fiyta Precision Technology Co.Ltd(000026) accurately records every second of astronauts’ space exploration. In 2022, the company will continue to practice the strategy of “big country brand”, establish the guidance of high-end national watch brand construction and the support of aerospace, solidly promote the integration of product and sales, build an integrated marketing system and systematically improve the “brand strength”.
The precision technology business will continue to be stronger and bigger. Precision technology is the new growth point of the company’s future business. In the long run, precision technology business will continue to strengthen and expand the advantageous fields such as optical communication and laser, further expand new markets and new customers such as aerospace and medical devices, take technology as the guide, continuously improve the complexity of Technology and further improve the overall solution ability.
Profit forecast and investment suggestions: affected by the covid-19 epidemic, the company’s Q1 performance has declined. We believe that the short-term income decline should be viewed rationally, and attention should be paid to the continuity of demand side consumption return and the growth space of medium and high-end watch consumption in Chinese Mainland. The company’s own brand deepens the core DNA of aerospace and practices the “big country brand strategy”. As a scarce domestic watch leader, its value has not been fully recognized by the market. In addition, as a new growth point, the future development of precision technology business is also worth looking forward to. We maintain the “buy” rating of the company. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be RMB 456 / 528 / 586 million respectively, with a year-on-year increase of 18% / 16% / 11% respectively, EPS will be RMB 1.07/1.24/1.38 respectively, and the corresponding p / E ratio of the closing price on April 22 will be 9 / 8 / 7 times respectively.
Risk factors: epidemic risk, backflow risk less than expected, private brand development risk less than expected
