\u3000\u3 Jiangsu Eastern Shenghong Co.Ltd(000301) 009 Hangzhou Coco Healthcare Products Co.Ltd(301009) )
Event: in 2021, the company achieved an income of 1.186 billion yuan, a decrease of - 27.44%, a net profit attributable to the parent of 40 million yuan, a decrease of 81.43%, a deduction of non net profit of 33 million yuan, a decrease of 83.42% and EPS of 0.17 yuan. The company plans to pay a dividend of 0.07 yuan per share (including tax). The short-term performance of the company is under pressure and is optimistic about the long-term development of its own brand business. In 2022q1, the company achieved revenue / net profit attributable to the parent company of 322 million yuan / 02 million yuan, a decrease of 3.34% / 95.14% at the same time, and deducted non net profit of 01 million yuan, a decrease of 96.31% at the same time.
Comments:
"Self owned brand + ODM two wheel drive, the adult incontinence business grew steadily. The company's self owned brand and ODM Sales model are parallel. The self owned brand business mainly focuses on adult incontinence products, and the product categories include adult diapers, pants, diapers and nursing pads. In 2021, the company's self owned brand business achieved a revenue of 391 million yuan, a decrease of 12.05% and an increase of 6.05% excluding the impact of epidemic prevention materials. The company is" reliable " The brand has won the champion of single product sales in the whole network for many years and has a strong influence. In terms of ODM business, the company's ODM business achieved a revenue of 778 million yuan in 2021, a decrease of 33.81% at the same time. Excluding the impact of income from epidemic prevention materials, it decreased by 28.01% at the same time, mainly due to the decline of China's infant birth rate and the slowdown of downstream demand boom.
Multi channel collaborative layout, special channel and other emerging retail models enjoy strong first mover advantages. In terms of offline channels, in addition to the traditional Ka and distribution mode, the company actively explores special channels and new retail areas in combination with the characteristics of the use scenarios of adult incontinence products, so as to enhance the company's brand coverage and influence. The company focuses on four types of retail end customers, including key hospital canteens and surrounding stores, key nursing homes, brand chain pharmacies and social organizations and charities. It has a strong first mover advantage in innovative channel layout. In terms of online channels, the company adopts direct or online distribution mode in combination with e-commerce platform. In addition, it expands emerging channels such as live delivery and community group purchase, so as to achieve greater market coverage and business growth.
The growth of gross profit margin was lower than expected, and the marketing layout continued to increase. Driven by the decline of gross profit margin of various businesses and the sharp reduction of mask business with high gross profit margin, the overall gross profit margin of the company in 2021 was 18.64%, down 9.19pct at the same time. In terms of business, the gross profit margin of infant care, adult care and pet care products of the company in 2021 was 17.33%, 19.78% and 8.15% respectively, with a decrease of 3.24pct, 6.76pct and 10.67pct. The sharp decline in the gross profit margin of adult incontinence products was mainly due to the company's efforts to promote its own brand by reducing prices and moderately transferring profits. In 2022q1, the gross profit margin of the company was 12.07%, with a decrease of 13.3pct. In terms of expenses, the company's financial expense rate decreased by 1.9pct to -0.53% in 2021, mainly due to the year-on-year decrease in exchange losses and interest income from raised funds. Affected by the increase of marketing expenses, labor costs and other factors, the company's sales expense rate reached 7.64% in 2021, with a same increase of 3.64pct; In terms of administrative expenses, the administrative expenses increased by 1.61pct to 3.13% in 2021, mainly due to the cancellation of social security and tax incentives, the increase of listing expenses and depreciation expenses. In 2021, the company's inventory was 82.24 million tablets, an increase of 72.56% at the same time, mainly due to the company's initiative to increase the inventory of its own brand and the delay in the delivery of ODM products affected by the epidemic.
China and China signed the contract to help upgrade the brand and continuously strengthen the construction of all channels. Looking forward to 2022, the company will continue to adhere to the "independent brand + ODM" two wheel drive development model, strengthen brand initiation and channel development, and constantly enrich differentiated product lines. In the field of OBM business, in terms of brand building, the company signed a contract with China consulting in 2021, focusing on adult incontinence, customizing unique strategies and creative services, strengthening consumer education and realizing comprehensive brand upgrading. In terms of channels, the company will further strengthen the construction of all channels and inject more brand promotion and differentiated products online; Strengthen offline distribution and business expansion in various channels to realize the rapid development of Wuxi Online Offline Communication Information Technology Co.Ltd(300959) complementary and mutual aid. In the ODM business field, internally, the company adheres to the high-end ODM positioning of Keai factory, selects ODM strategic customers, and maintains the effective utilization of high-quality production capacity; Externally, the company further integrates product design, production solutions and supply chain capabilities, and strengthens service capacity and stable supply capacity by providing complete problem solutions.
Profit forecast and investment rating:
As the company's business expansion was lower than expected, we lowered the EPS of 202223 to 0.36/0.57 yuan (the original value was 0.56/0.79 billion yuan), and increased the EPS forecast of 2024 to 0.75 yuan. The current share price corresponds to 33.47 times PE in 2022. In the long run, as a leading enterprise in adult incontinence care, the company will benefit from the development of the industry, with large performance growth space and maintain the "buy" rating.
Risk factors: covid-19 epidemic spread risk, intensified industry competition and raw material price fluctuation risk.
