\u3000\u3 Bohai Water Industry Co.Ltd(000605) 099 Cocreation Grass Co Ltd(605099) )
From 2021 to 2022q1, the revenue increased rapidly, waiting for the marginal repair of profitability and maintaining the “buy” rating
In 2021, the company achieved a revenue of 2.302 billion yuan (+ 24.39%), a net profit attributable to the parent company of 380 million yuan (- 7.45%), deducting a net profit not attributable to the parent company of 355 million yuan (- 7.53%). The annual revenue increased rapidly and the profit side was under pressure, mainly due to the large increase in the price of raw materials, the lower than expected production capacity in Vietnam under the influence of the epidemic, the high operation of shipping prices, etc. In 2021q4 / 2022q1, the company’s revenue was 553 / 681 million yuan, with a year-on-year increase of + 9.01% / + 27.78%. The net profit attributable to the parent company was 60 / 85 million yuan, with a year-on-year increase of – 38.33% / – 13.80%. After deduction, the net profit attributable to the parent company was 57 / 82 million yuan, with a year-on-year increase of – 36.26% / – 14.82%. The profit side of 2022q1 is under pressure, the profit forecast is lowered, and the profit forecast for 2024 is added. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be 492 / 655 / 858 million yuan (originally 688 / 862 million yuan from 2022 to 2023), the corresponding EPS will be 1.22/1.63/2.13 yuan, and the current share price will be 20.0/15.1/11.5 times that of PE. It is optimistic that the company will continue to grow under the support of qualification barriers / channel advantages / R & D strength, and maintain the “buy” rating.
Revenue split: leisure grass achieved high growth, and the demand of overseas market recovered
In terms of products, the revenue of sports grass / leisure grass / grass silk and other products in 2021 was 527 million yuan (+ 2.08%) / 1647 million yuan (+ 31.62%) / 118 million yuan (+ 53.68%), respectively. The growth of sports grass was steady, and the growth of leisure grass was high, mainly due to the increase in the demand for leisure lawn for household consumption. By region, in 2021, domestic / overseas revenue reached 279 million yuan (- 7.32%) / 2.013 billion yuan (+ 30.42%) respectively. Due to the gradual weakening of overseas affected by the epidemic, the demand for sports grass recovered, and the proportion of overseas revenue increased to 87.83%. According to the sales model, the direct sales / wholesale revenue was 545 million yuan (+ 9.86%) / 1.747 billion yuan (+ 29.56%).
Profitability: the effect of fee control is outstanding, and the profitability of 2022q1 is under pressure
In 2021, the overall gross profit margin of the company was 27.9% (- 9.0pct), which was mainly affected by the sharp rise in the price of raw materials. The annual sales / management / R & D / financial expense ratio was -0.08 / – 0.56 / + 0.07 / – 1.76pct respectively year-on-year. Superimposed on the rapid increase of the company’s revenue scale, the expense ratio decreased by 2.32pct to 11.15%. Under the comprehensive influence, the net interest rate in 2021 was 16.52% (-5.69pct), and the net interest rates in 2021q4 / 2022q1 were 10.83% / 12.52% respectively, with a year-on-year increase of -8.31pct / – 6.04pct respectively. The profitability of 2022q1 company is under short-term pressure. It is expected that with the gradual decline of raw material and shipping prices and the recovery of capacity utilization in Vietnam, the profitability is expected to be marginal repaired in 2022.
Risk tips: sharp fluctuations in exchange rate, raw material prices, slowing demand growth, etc.
