\u3000\u3 Bohai Water Industry Co.Ltd(000605) 336 Zhejiang Sanfer Electric Co.Ltd(605336) )
Event: Zhejiang Sanfer Electric Co.Ltd(605336) released the first quarterly report of 2022. The company achieved revenue of 190 million yuan in 2022q1, yoy + 23.3%; Achieved performance of 37.677 million yuan, yoy + 10.3%; The deduction of non performance was 31.62 million yuan, yoy + 1.3%. We believe that with the launch of high-end new products in the future, the profitability of the company is expected to be repaired.
Rapid growth of Q1 Revenue: shuaifeng Q1 revenue achieved 20% + growth, faster than the growth rate of the industry. According to orvey data, the retail sales of Q1 integrated stove industry is yoy + 19.5%, and the company’s industry position is improved. Combined with the industry online data, we believe that the revenue growth of shuaifeng is mainly from the sales contribution (according to the industry online, the sales growth rate of Q1 shuaifeng integrated stove is 20.6%).
Q1 profitability decline: according to the announcement, the net profit margin of shuaifeng 2022q1 was 19.7%, with a year-on-year increase of -2.3pct. The main reasons are as follows: 1) the cost price increased significantly, and the difference between the company’s Q1 gross profit margin and sales expense rate was -1.1pct year-on-year. In the next few quarters, the company will improve its profitability by launching medium and high-end integrated stoves. In the long run, shuaifeng’s development of high-end categories is conducive to establishing brand image and improving profitability. 2) Due to the increase of employee salary and the payment of equity incentive expenses, the Q1 management expense rate was + 1.8pct year-on-year; 3) R & D investment increased, and the R & D expense rate in Q1 was + 4.0pct year-on-year. Throughout the year, we expect the R & D expense rate of the company to remain stable year-on-year.
Q1 operating cash flow increased significantly: according to the announcement, the net operating cash flow of shuaifeng Q1 was 25.852 million yuan, compared with 2.949 million yuan in the same period of last year. The cash flow increased significantly, mainly due to the increase in the margin of bank acceptance bills recovered by the company, and the cash received in Q1 related to other operating activities increased by 44.467 million yuan year-on-year. Looking forward to 2022q2, we expect this factor will still play a role and drive the growth of the company’s operating cash flow.
Investment suggestion: Zhejiang Sanfer Electric Co.Ltd(605336) is an advantageous brand of integrated stoves in China. The product structure is gradually optimized, and the company is also expanding its new products. We expect that shuaifeng’s EPS from 2022 to 2023 will be 1.58/2.00 yuan respectively (considering the conversion of shares), and the six-month target price will be 31.60 yuan, corresponding to 20 times PE in 2022, maintaining the investment rating of buy-a.
Risk tip: the price of raw materials has risen sharply and the competition pattern has deteriorated
