\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 398 Hla Group Corp.Ltd(600398) )
In 2021, the revenue / performance increased by 12% / 40%, and the performance was in line with expectations. The company released its annual report for 2021. The annual revenue was + 12.4% to 20.188 billion yuan year-on-year, the gross profit margin was + 3.2pct to 40.6% year-on-year, the sales expense ratio was + 2.7pct to 16.1% year-on-year, the management expense ratio was – 2pct to 4.9% year-on-year. In conclusion, the net profit attributable to the parent was + 2.4pct to 12.3%, the net profit attributable to the parent was + 39.6% to 2.491 billion yuan year-on-year, and the revenue / performance of Q4 company was – 2.4% / – 10.2% to 6.03/440 billion yuan year-on-year, The overall performance of the company in 2021 is in line with expectations. The company disclosed the annual profit distribution plan and plans to distribute a cash dividend of 5.1 yuan (including tax) to all shareholders for every 10 shares, with a dividend rate of 10.5% calculated based on the closing price on April 27.
2022q1 revenue / performance fell by 5% / 14%. On the same day, the company released its 2022q1 quarterly report, with a year-on-year revenue of – 5.1% to 5.212 billion yuan, a year-on-year gross profit margin of + 2.4pct to 45.3%, a year-on-year sales / management expense ratio of + 4.1 / + 0.2pct to 17.3% / 6.1%. In conclusion, the net profit attributable to the parent company was – 1.5pct to 13.9% and a year-on-year net profit attributable to the parent company of – 14.2% to 720 million yuan. Affected by the epidemic, the company’s terminal sales were under pressure.
The profitability of main brands has been improved, and the direct marketing channels have been expanded rapidly. The annual revenue of the main brand Hla Group Corp.Ltd(600398) series was + 10% to 15.13 billion yuan year-on-year, with a gross profit margin of + 4pct to 40% year-on-year, compared with the same period in 2019. The profitability has recovered to the level in 2019. During the year, the company continued to strengthen product upgrading, led by functional products, launched a variety of IP co branded products, accelerated the expansion of Direct stores on the channel side, and optimized the structure of franchise stores to improve efficiency. 1) Direct stores: the company’s Direct stores had a year-on-year revenue of + 44.4% to 2.47 billion yuan and a year-on-year gross profit margin of + 7.3pct to 63.5%. By the end of the year, there were + 241 to 727 Direct stores of main brands compared with the beginning of the year. 2) Franchise and other channels: the company’s franchise and other channels have a year-on-year revenue of + 7.6% to 14.7 billion yuan and a year-on-year gross profit margin of + 2.9 PCT to 36.6%, of which the online revenue is + 33% to 2.7 billion yuan. The increase in online promotion activities has resulted in a year-on-year gross profit margin of – 2.3 PCT to 36.2%. According to our tracking, the sales ranking of main brands is at the forefront of many platforms, and the development trend is bright; In 2021, there were – 112 to 4945 offline franchised and affiliated stores of main brands compared with the beginning of the year. In Q1, affected by the epidemic, the revenue of main brands increased from – 7.3% to 4.26 billion yuan year-on-year, the gross profit margin increased from + 3PCT to 45.7% year-on-year, there were + 53 Direct stores of main brands and – 33 franchise and associated stores in a single quarter.
New brands are developing rapidly, and ovv continues to maintain bright growth. 1) San Keno: the annual revenue of San Keno was + 9% to 2.26 billion yuan year-on-year, and the gross profit margin was -1pct to 51.6% year-on-year; Q1 revenue was – 4.3% to 300 million yuan year-on-year, and gross profit margin was – 1.3pct to 53.9% year-on-year. 2) Other brands: other brands continue to maintain a high growth rate, with annual revenue of + 27% to 2 billion yuan and gross profit margin of + 5.7pct to 44.1% year-on-year; Q1 revenue + 16.7% to 490 million yuan, with a year-on-year gross profit margin of 44.4%. Ovv brand is developing rapidly, and the growth rate of revenue in 2021 is expected to be higher than that of the whole.
The operation is stable, the short-term epidemic fluctuation has hindered the sales, and we expect the performance to be stable throughout the year. In 2021, the company’s inventory turnover days / accounts receivable turnover days were – 30 / flat to 233 / 18 days year-on-year, and the net operating cash flow was + 54.1% to 4.36 billion yuan year-on-year. By the end of 2022q1, the company had inventory of 8.56 billion yuan, an increase compared with the end of 21 and the end of 21q1. The outbreak of the epidemic in H1 places has caused short-term pressure on sales. We assume that the impact of the epidemic will weaken in the second half of the year. With the company’s rapid store opening plan, the company’s revenue / performance is expected to achieve single digit growth throughout the year.
Profit forecast and investment suggestions: the company is affected by the fluctuation of the epidemic in the short term. In the long term, the company will focus on the main brand. At the same time, the new brand represented by ovv will focus on improving the hematopoietic ability. The company’s dividend policy is stable and the valuation is expected to recover. Taking into account the impact of the epidemic, we adjusted the forecast of net profit attributable to the parent company from 2022 to 2024 to RMB 2.645/30.36/3.37 billion, and the current share price is RMB 4.87, corresponding to 8 times of PE in 22 years, maintaining the rating of “overweight”.
Risk warning: the recovery speed of the epidemic situation is lower than expected; Risk of continuous decline of main brands in the same store; Overseas business expansion is less than expected; The development of the company’s new brand is not as expected.
