\u3000\u3 China Vanke Co.Ltd(000002) 791 Guangdong Kinlong Hardware Products Co.Ltd(002791) )
Event: the company released the 2021 annual report and the first quarterly report of 2022. In 2021, the revenue reached 8.807 billion yuan, a year-on-year increase of + 30.72%; The net profit attributable to the parent company was 889 million yuan, a year-on-year increase of + 8.83%. In 2022, Q1 achieved a revenue of 1.292 billion yuan, a year-on-year increase of + 3.93%; The net profit attributable to the parent company was -89 million yuan, a year-on-year increase of -309.57%.
During the period of rapid decline of the industry, the company abides by cash flow control and delivery, expands product categories and sales team against the trend, and strengthens scene sales ability. The revenue growth rates of 21q4 and 22q1 were 28% and 3.9% respectively. In the second half of 2021, the sales team expanded rapidly, reaching 6518 people, an increase of 23.87% over the beginning of the year. At the same time, in response to the changes of market demand, the company promotes the sinking of channels to county and city markets and the development of scene sales, and responds to the increasing demand of customers for "one-stop service" (product and scheme integration + installation service + after-sales service).
The cost of raw materials depresses the gross profit margin, and the increase of channel staff pushes up three fees. In 2021, the gross profit margin of the company's sales was 35.24%, with a year-on-year change of -4.01pct. In 2022, the gross profit margin of Q1 company's sales was 28.80%, with a year-on-year decrease of 7.43 percentage points, most of which came from the rise of raw material prices and a small part from the change of product structure. In terms of period cost rate, the total cost rate in 2021 was 20.40%, a year-on-year decrease of 1.98 percentage points, and the per capita efficiency of channels, management, production and other links continued to improve. In Q1 2022, due to the large increase of personnel compared with the same period last year and the slowdown of income growth, the expense rate during the period could not be effectively diluted.
The operating cash flow remained stable, the inventory turnover continued to accelerate, and the net operating cycle was further shortened. The net operating cash flow of the company in 2021 was 546 million yuan, a year-on-year increase of + 9.10%. 1) Cash to cash ratio: in 2021, the cash to cash ratio was 81.54%, with a year-on-year ratio of -151 PCT. At the end of 2021, the balance of accounts and notes receivable of the company was 4.454 billion yuan, with a year-on-year ratio of + 68.93%; 2) Cash ratio: in 2021, the cash ratio was 71.30%, with a year-on-year increase of -0.39pct. At the end of 2021, the inventory balance was 1.255 billion yuan, a year-on-year increase of + 21.28%, and the inventory turnover was further accelerated. The net business cycle in 2021 was 79.07 days, with a year-on-year decrease of 20.09 days. The operating cash flow of the company in 2022q1 was -696 million yuan, which was basically the same as that in the same period of last year.
Profit forecast and investment rating: after long-term exploration and continuous iteration, Jianlang has formed an efficient sales model of multi category products and scattered small B customers. During the downturn of the industry, the company adhered to cash flow, actively expanded personnel against the trend, upgraded service capacity and iterated sales model. We estimate that the net profit attributable to the parent company from 2022 to 2024 will be 1.006/1.566/2.166 billion yuan respectively; The corresponding PE is 25X / 16x / 12x respectively. Considering the future growth and operating leverage of the company, it is covered for the first time and given a "buy" rating.
Risk warning: the risk of fluctuation of downstream construction industry; Price fluctuation risk of main raw materials; Risks of new market development to business sustainable growth; M & A integration risk.
