\u3000\u3 Shengda Resources Co.Ltd(000603) 195 Gongniu Group Co.Ltd(603195) )
Event:
The company released the first quarterly report of 2022. 22q1 achieved an operating revenue of 3.078 billion yuan, a year-on-year increase of 19.6%; The net profit attributable to the parent company was 641 million yuan, a year-on-year increase of 5.7%; Net profit deducted from non parent company was 562 million yuan, with a year-on-year increase of 0.7%. Since 21q3, the growth rate of the revenue side has increased quarter on quarter, while the profit side is slower than the revenue side due to factors such as the rebound of the epidemic and the rise of raw material prices.
Comments:
The multi category monopoly of decorative lamp channel is the main driving force of 22q1 revenue growth. By category, the revenue of electrical connection business, intelligent electrical lighting business and digital accessories business in 2021 was 6.41 billion yuan, 5.55 billion yuan and 370 million yuan respectively, with a year-on-year increase of 16%, 37% and – 11% respectively, and a two-year compound growth rate of 11%, 12% and 3% respectively. According to the announcement of the annual performance presentation meeting, it is speculated that the growth of all sectors in 22q1 will basically continue the 21-year trend, including the steady growth of converters and wall switches, and the stronger growth of lighting business. The growth driving force of the latter mainly comes from the multi category monopoly of decorative lamp channels. In 2021, focusing on the one-stop purchase demand of consumers in the front decoration link, the company further promoted the monopoly and integration of decorative channels, introduced electrical lighting products such as wall switch sockets, LED lighting, circuit breakers, living appliances and intelligent door locks, and has successfully developed more than 18000 terminal outlets.
The pressure on profit margin eased and the expenses increased slightly during the period. 22q1 company’s gross profit margin was 34.47%, year-on-year -3.3pcts; The net interest rate was 20.8%, with a year-on-year change of -2.7pcts. The decline in gross profit margin was mainly due to the high price of raw materials. The average price of copper 22q1, the company’s main raw material, increased by 14% year-on-year and 1% month on month compared with 21q4. The effect of the company’s hedging strategy was weakened; The decline in gross profit margin was narrower than that in 21q4, due to the company’s digestion of the high cost of raw materials. In terms of cost rate, the company will focus on the two new tracks of new energy vehicle charging pile / gun and smart home in 2021. Many new products are in the early stage of launch, and the early-stage cost investment is large. Therefore, the sales / management / R & D cost rate of 22q1 company is 5.3% / 3.9% / 3.6% respectively, with a year-on-year increase of + 0.6pcts / + 0.4pcts / + 0.6pcts.
The cash flow increased steadily and the downstream demand was good. 22q1’s net operating cash flow was 434 million yuan, a year-on-year increase of 22%, of which the company received 3.813 billion yuan in cash from selling goods and providing labor services, a year-on-year increase of 23%, both higher than the growth rate of revenue in the same period. The company’s cash flow is in good condition. 22q1 company’s monetary capital and trading financial assets totaled 11.5 billion yuan, an increase of 12% over the end of 21 years. It has abundant available cash and is expected to continue to help the development of new categories and channels. 22q1 contract liabilities amounted to 735 million yuan, a year-on-year increase of 68%, and the payment from downstream channels was positive.
Profit forecast, valuation and rating: optimistic about the leading position of the company’s electrician and lighting, and maintain the “overweight” rating Gongniu Group Co.Ltd(603195) as a leader in electrical engineering, we have clear long-term development planning, consolidate the leading advantages of core business converters and wall switch sockets, accelerate the layout around the two tracks of new energy and intelligent ecology, and we are optimistic about the long-term development of the company with the listing of new products and good momentum. It is estimated that the net profit attributable to the parent company from Gongniu Group Co.Ltd(603195) 2022 to 2024 will be 3.13 billion yuan, 3.59 billion yuan and 4.04 billion yuan, and the current price corresponding to PE will be 26, 23 and 20 times respectively, maintaining the “overweight” rating of the company.
Risk tip: the price of raw materials has been high for a long time, and the development of new categories is less than expected.
