\u3000\u3 China Vanke Co.Ltd(000002) 511 C&S Paper Co.Ltd(002511) )
Events
On April 27, the company released the annual report and the first quarterly report. In 21a, the company achieved a revenue of 9.15 billion yuan, a year-on-year increase of + 16.95%, and the net profit attributable to the parent company was 581 million yuan, a year-on-year increase of – 35.85%; 1q22 achieved a revenue of 1.884 billion yuan, a year-on-year increase of – 10.36%, and a net profit attributable to the parent company of 133 million yuan, a year-on-year increase of – 50.82%.
Business analysis
4q21’s revenue grew rapidly and the high cost led to pressure on short-term profits. The revenue of 21a household paper / personal care business was 8.658/77 billion yuan, with a year-on-year increase of + 15.4% / – 23%, of which 2H revenue was + 15.4% / + 11.8%; 4q’s overall revenue was + 26.8% year-on-year. From the perspective of profitability, the gross profit margin of 21a is 53.9% (- 5.4pct), and the net profit margin is 6.35% (- 5.2pct); Among them, the gross profit margin of 4q is 31.5% (Mom – 2.8pct) and the net profit margin is 3.4% (- 7pct). The main reasons are as follows: 1) since 21 years, there has been more new capacity of household paper, and the fierce terminal competition has led to poor price increase and increased promotion fees; 2) The price of wood pulp and energy increases and the cost pressure; 3) The company increased strategic marketing investment such as product promotion. 21a sales / Management & R & D / financial expense ratio increased from + 1.97 / – 1.05 / + 0.15pct to 21.7% / 6.1% / – 0.08% year on year respectively.
1q22: revenue growth slowed down under the high base, and profitability was repaired month on month. 1q22 weak downstream demand + slowing growth of residents’ destocking revenue, with a year-on-year increase of – 10.36%. The competition slows down under high slurry prices. The company reduces terminal promotion efforts, with a gross profit margin of 32.8% (year-on-year -7.6pct, month on month + 1.3pct), a sales / Management & R & D expense rate of -0.88 / + 0.75pct and a net profit margin of 7.1% (year-on-year -5.8pct, month on month + 3.71pct).
Optimization of category structure + rich categories, deep cultivation of channel construction, optimistic about the increase of share. At the category end, the competition in the short-term household paper industry is still fierce, but the company relies on the medium and high-end brand face, improves the proportion of wet towels and kitchen paper towels in the high-end product line, reconstitutes the sun brand team for flat operation, and opens a new space for medium and long-term development of individual protection categories such as sanitary napkins and diapers. On the channel side, the company actively laid out new retail channels such as e-commerce and community group purchase, with a growth rate exceeding the overall industry market and promoting the continuous improvement of terminal market share.
Profit adjustment and investment suggestions
We are optimistic about the company’s brand operation ability and the promotion of medium and long-term category expansion strategy. It is estimated that the company’s EPS in 22-24 years will be 0.51, 0.6 and 0.69 yuan respectively, and the current share price corresponding to PE will be 20, 17 and 15 times respectively, maintaining the “buy” rating.
Risk tips
The risk that the downstream consumption demand is less than expected; The risk of intensified market competition; Risk of ineffective control of sales expense rate; Risk of lower than expected sales of new products.
