Chenguang Co., Ltd. ( Shanghai M&G Stationery Inc(603899) )
Event: the company released the first quarter report and realized a revenue of 4.229 billion yuan in 2022q1, a year-on-year increase of 10.93%; The net profit attributable to the parent company was 276 million yuan, a year-on-year decrease of 16.04%; Deduction of non net profit decreased by 13.34% year-on-year.
Comments:
The company's 22q1 revenue side reflects steady growth toughness, and the performance of office direct sales (klip) is brilliant. In the first quarter, against the background of the multi-point spread of the epidemic in China and the weak overall consumption environment, the company's revenue still achieved good development, reflecting the leading growth toughness of the company through omni-channel and multi business layout in recent years. In terms of products, the revenue of writing tools / student stationery / office stationery / other products / office direct sales (klip) was 499 million yuan / 719 million yuan / 730 million yuan / 133 million yuan / 2.15 billion yuan respectively, with a year-on-year increase of - 25.37% / - 6.69% / - 7.18% / + 14.48% / + 46.40% respectively. We believe that with the gradual mitigation of the epidemic in China and the effect of policies related to steady growth and consumption promotion, the growth rate of the company's stationery business income is expected to return to the normal development track. In terms of new business, klip / Chenguang living hall (including Jiumu sundries Club) / Chenguang technology achieved revenue of 2.15 billion yuan / 265 million yuan (Jiumu 243 million yuan) / 118 million yuan respectively, with a year-on-year increase of + 46.40% / + 9.02% (Jiumu 9.90%) / + 9.47% respectively. The business of large retail stores continued to develop well, and the stores expanded steadily. 22q1 company has 532 large retail stores in China, an increase of 9 from 21q4, an increase of 90 year-on-year, including 60 Chenguang life hall and 472 Jiumu sundries Club (321 directly operated and 151 franchised) by the end of the quarter.
The business structure of stationery was improved, and the gross profit rate of stationery products was improved comprehensively. In terms of gross profit margin, the gross profit margin of 21q4 / 22q1 was 21.11% / 21.71% respectively, with a year-on-year change of - 2.9pct / - 1PCT respectively. Under the background of the continuous high price of Q1 raw materials, the gross profit margin of the company's stationery products has increased year-on-year, reflecting the company's good results in product structure upgrading and cost control. Specifically, the Q1 gross profit margin of the company's writing tools / student stationery / office stationery / other products / office direct sales (klip) was 40.40% / 33.42% / 29.24% / 46.56% / 9.3% respectively, with a year-on-year change of + 1.29pct / + 1.11pct / + 1.08pct / + 1.83pct / - 1.2pct respectively. In terms of expense ratio, the company's 22q1 sales / management / R & D / financial expense ratio is 8.08% / 4.31% / 1.07% / - 0.09% respectively, with a year-on-year change of -0.67pct / - 0.58pct / - 0.17pct / - 0.1pct, and the expense control is good. In terms of profit margin, the company's 22q1 net profit margin attributable to the parent company was 6.52%, with a year-on-year ratio of -2.09pct and a month on month ratio of -0.83pct. It is expected that in the future, with the recovery of traditional business, the profit margin trend will gradually usher in an upward inflection point.
Profit forecast: continue to be optimistic about the firm's traditional core business barriers, the improvement of data-driven efficiency, and the upgrading of retail service capacity. The long-term growth path is clear, the channel side accelerates the omni channel layout through online, offline and direct supply mode, and the high-end products + category expansion drive the refinement of products; The business of office direct selling and retail stores continued to grow rapidly, and new business barriers were quickly built. The increase in shareholding shows development confidence. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be 1.793 billion yuan, 2.14 billion yuan and 2.564 billion yuan respectively. At present, the corresponding 22-year PE of the stock price (2022 / 4 / 28) is 25X, maintaining the "buy" rating.
Risk factors: the risk of large-scale outbreak of the epidemic and the risk of price fluctuation of raw materials.
