\u3000\u3 Bohai Water Industry Co.Ltd(000605) 336 Zhejiang Sanfer Electric Co.Ltd(605336) )
Key investment points
Event: Recently, the company released its 2021 annual report and the first quarterly report of 2022.
Comments:
The company’s revenue scale accelerated. In 2021, the company achieved an operating revenue of 978 million yuan, a year-on-year increase of 36.93%, and the net profit attributable to the owner of the parent company was 247 million yuan, a year-on-year increase of 26.95%. In the first quarter of 2022, the company achieved an operating revenue of 191 million yuan, a year-on-year increase of 23.34%, and the net profit attributable to the owner of the parent company was 38 million yuan, a year-on-year increase of 10.31%. In recent years, the integrated stove industry has developed vigorously. The company focuses on the medium and high-end positioning, upgrades and creates a younger brand, and gradually establishes a diversified, multi-level and multi-channel sales channel network to help improve the market share and promote the sales volume and sales volume of the company’s integrated stove products.
The company’s profitability is under pressure in the short term. In 2021, the gross profit margin of the company’s sales was 46.24%, a year-on-year decrease of 2.96 percentage points, of which the profitability in the fourth quarter improved to 45.24% month on month, and decreased slightly in the first quarter of 2022. This is mainly due to the rise in the price of upstream raw materials and the increase in transportation, labor and other costs. By continuously improving the operation and management level, optimizing the product structure, relying on the advantages of scale and multiple products, the company’s net sales profit margin in 2021 was 25.22%, a year-on-year decrease of 1.99 percentage points, and the decline was less than the gross sales profit margin. In the first quarter of 2022, the company’s net interest rate fell to 19.68% year-on-year by 2.32 percentage points, which is expected to be due to the increase of R & D investment and share based payment of equity incentive. Pay attention to the changes of raw material prices and other factors in the future. If the cost pressure drops, the company’s profitability will usher in marginal improvement.
Accelerate the company’s R & D and brand expansion. ① In terms of products, in recent years, focusing on product function design and appearance improvement, the company has launched popular products such as the independent steaming and baking model of X1 Gemini series and the first intelligent integrated stove t6-8b using tmall fire shadow module jointly customized with tmall technology, which have been greatly welcomed by consumers and further consolidated shuaifeng’s leading position in the integrated stove industry. ② In terms of brand, the company adheres to the medium and high-end line of kitchen electricity and strengthens the younger and upgraded brand. The company has continuously strengthened the publicity of new media platforms, strengthened the layout on wechat, microblog, Tiktok, headlines, little red book and other platforms, and created a multi-dimensional communication matrix. According to Euromonitor information consulting, from 2019 to 2021, the company won the national leading brand in the sales of integrated cooking stoves for steaming and baking for three consecutive years. ③ Offline channels: the company has established a nationwide marketing network and service system, and achieved double growth in the number and quality of dealers in 2021. Online channel: the company independently established the e-commerce Department of jd.com and reached multi-dimensional cooperation with jd.com, and tmall platform continued to make efforts; In addition, the company also established Hangzhou e-commerce center to improve its operation capacity and actively seize the sales share of the online market. Diversified channels: the company organizes marketing personnel to help connect Ka channels, home decoration channels and regional engineering channels one-on-one, and helps dealers quickly sign cooperation agreements with various channels to realize the rapid development of multiple channels.
Investment suggestion: Zhejiang Sanfer Electric Co.Ltd(605336) is a leading enterprise of integrated stove, with strong innovation and R & D ability and adhering to differentiation strategy; Its new capacity of 400000 integrated stoves is gradually released, superimposed with channel diversification and marketing upgrading, and the company’s future performance can be expected. It is estimated that the company’s EPS in 2022 / 2023 will be 2.17 yuan / 2.73 yuan respectively, and the corresponding PE will be 12 / 10 times respectively, maintaining the recommended rating.
Risk tips: macroeconomic fluctuation risk, intensified market competition risk, real estate market fluctuation risk, “fine decoration” policy on integrated stove market risk, raw material price fluctuation risk, single product structure risk, capacity digestion risk, etc.
