\u3000\u3 Guocheng Mining Co.Ltd(000688) 793 Shenzhen Breo Technology Co.Ltd(688793) )
Events
The company issued the annual report of 2021 and the report of the first quarter of 2022. In 2021, the company achieved a total operating revenue of 1.190 billion yuan / + 43.93%; Net profit attributable to parent company: 92 million yuan / + 29.92%; The net profit deducted from non parent company is 77 million yuan / + 22.23%; The basic earnings per share is 1.74 yuan / + 13.73%. In 2022q1, the company achieved operating income of RMB 25 million / + 15.29%, net profit attributable to the parent company of RMB -10 million / – 188.84%, and basic earnings per share of RMB -0.16.
Key investment points
“Iteration + innovation”, the revenue driven by new products increased significantly: in 2021, the company’s operating revenue was 1.190 billion yuan / + 43.93%, and the compound growth rate in 20182021 reached 32.79%. It is the company’s continuous iteration of main categories, and the performance of new categories launched since last year is good. The revenue scale of new products in 2021 reached 237 million yuan, accounting for 19.89% of the company’s main business revenue; On the one hand, the original massager series iterated over the new head massager dream6 and neck massager neck C2. According to the business consultant data, the market share of the company’s neck massager products on tmall platform has increased by 5.45 percentage points from 4.03% in 2020 to 9.48% in 2021, growing rapidly; On the other hand, the new category of moxibustion boxes listed in the second half of last year brought a new high potential growth point for the company – achieved sales of about 60 million yuan, contributed 5.07% of the company’s main business revenue in the first half of the year, accounting for about 10% of the revenue in the second half of the year.
Optimize the channel structure and focus on online channels and direct selling modes: in 2021, the proportion of each sales mode from high to low is: online direct selling 37%, offline direct selling 25%, online platform warehousing 16%, offline distribution 12%, ODM OEM 6%, online distribution 4%. The corresponding gross profit margin is 59.8%, 71.2%, 54.6%, 39.4%, 27.0% and 37.1% respectively. Only Wuxi Online Offline Communication Information Technology Co.Ltd(300959) the gross profit margin of direct selling channels is higher than the overall gross profit margin of the company 56.7% / -0.53pct; At the same time, under the impact of the epidemic, the gross profit margin of online distribution and offline distribution decreased significantly, with a year-on-year gross profit margin of -12.2pct and -5.4pct respectively. The company focused on the online channel and direct selling mode with better profitability. The online revenue in 2021 was 683 million yuan, with a double-digit increase of 58.44% year-on-year. In particular, the direct selling business revenue rose by 61.87%, becoming the main source of income of online channels at the proportion of 65.12%. As an important supplement to the product experience, offline stores account for 36.96% of the total revenue, with a revenue scale of 439 million yuan / + 26.05%. The steady growth is due to the optimization of the structure of offline Direct stores, and reduce the adverse impact of the epidemic by increasing the proportion of stores in shopping centers and diversified marketing methods; The annual revenue of offline B2C increased by 33.88% year-on-year. By the end of 2021, the number of Direct stores had reached 186, including 108 stores in shopping centers, accounting for about 58%.
Continuously increase research and development to create technical barriers and first mover advantages: the company’s sales expenses in 2021 and 22q1 were 485 million yuan / + 45.60% and 113 million yuan / + 25.20% respectively, which was due to the increase of store rent, labor cost and channel promotion fee. The overall market of intelligent massager is at an early stage, with a penetration rate of only about 1.5%. In order to strengthen the moat of technology and quickly occupy the market, the company continues to increase its research and development. The R & D expense rates in 2021 and 2022q1 are 47 million / + 27.96% and 15 million yuan / + 44.96% respectively, and the R & D investment is further increased; As of December 31, 2021, the company and its subsidiaries had 672 domestic and foreign patents in total, and 96 new domestic and foreign patents were added in that year, including 7 domestic invention patents and 8 overseas invention patents; A total of 30 new copyrights were added, including 16 computer software copyrights.
Investment suggestion: Shenzhen Breo Technology Co.Ltd(688793) as a leading enterprise of Intelligent Portable Massager, since the launch of the first massager product in 2001, it has continuously innovated and developed, combined with the principles of traditional Chinese medicine, launched products around the common vulnerable parts such as head, neck and eyes, paid attention to design and brand building, and has a good performance in online channels especially. The first purchase of PE in 2024, 2024 and 2022 is 16.57 times of the company’s prediction of “1.66 and 22.2 times of the first purchase of PE in 2024, respectively, which is three times of the company’s prediction of” 1.66 and 2.57 times of 2024 and 2024 “respectively.
Risk warning: market competition intensifies; The rise in raw material costs exceeded expectations; The research and development effect of new products is not as good as expected, and the market penetration speed is not ideal
