\u3000\u3 Bohai Water Industry Co.Ltd(000605) 336 Zhejiang Sanfer Electric Co.Ltd(605336) )
Key investment points
Performance summary: Q1 company achieved revenue of 190 million yuan in 2022, with a year-on-year increase of 23.3%; The net profit attributable to the parent company was 40 million yuan, an increase of 10.3% year-on-year; Deducting non net profit of RMB 30 million, with a year-on-year increase of 1.3%, mainly due to the company’s investment income of RMB 5.93 million during the reporting period.
Enjoy industry dividends and rapid growth of revenue. According to the total data pushed by a VC, the retail volume of integrated stove industry in 2022q1 is 510000 units, with a year-on-year increase of 4.9%; The retail sales reached 4.75 billion yuan, a year-on-year increase of 19.5%, and the industry maintained growth. As one of the leading enterprises of integrated stoves, the company continued to strengthen R & D, promote the acceleration of product innovation, strengthen the layout of diversified channels, adhere to Wuxi Online Offline Communication Information Technology Co.Ltd(300959) coordinated development, help the company enjoy the development dividend of the industry and promote the revenue to grow faster than the industry.
Profitability is under short-term pressure. During the reporting period, affected by the rising price of raw materials, the company’s comprehensive gross profit margin was 44.3%, down 3PP year-on-year. In terms of expense ratio, the company’s sales expense ratio was 12.3%, a year-on-year decrease of 1.9pp; Our share based incentive fee increased by 15.5% year-on-year, mainly due to the increase in our share based incentive fee of 8pp; The financial expense ratio was – 3.8%, unchanged year-on-year. Overall, the company’s net interest rate was 19.7%, down 2.3pp year-on-year, and its short-term profitability was under pressure.
The management injected new vitality and continued to increase R & D. During the reporting period, the company’s personnel changed, and Shao Yujie, the daughter of the actual controller general manager and general manager Shao, served as the general manager, injecting new vitality into the company’s management. In addition, the company continued to increase R & D and promote product renewal iteration. During the reporting period, the company’s R & D expenses increased by 149% year-on-year, and the R & D expense rate reached 7.8%, up 4pp year-on-year. However, it is expected that the R & D expense rate of the whole year will remain at about 3.5%. We speculate that the company’s R & D expenses, in addition to the renewal and iteration of integrated stoves, will also be partly used for the R & D of dishwashers and integrated sinks, so as to promote the expansion of the company’s categories. With the change of the company’s management and the continuous enrichment of the product matrix, the company is expected to accumulate and develop well in the long term.
Profit forecast and investment suggestions. It is estimated that the EPS from 2022 to 2024 will be 1.9/2.32/2.93 yuan respectively. Considering that the company, as a high-quality enterprise of integrated stove, continues to optimize its product channels, it is expected that the company will fully benefit from the improvement of the penetration rate of integrated stove and maintain the “buy” rating.
Risk warning: the price of raw materials may fluctuate sharply and the terminal sales may be less than expected.
