\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 398 Hla Group Corp.Ltd(600398) )
The company released 2021 annual report and 2022q1 financial report, in which the revenue / net profit attributable to parent company / net profit deducted in 2021 were 20.188/24.91/2.386 billion respectively, with a year-on-year increase of + 12.41% / + 39.6% / + 37.79%. The increase in net profit was higher than that in revenue, mainly due to the decrease in annual activities, the increase in the proportion of direct sales and the increase in gross profit margin. In Q4, the revenue / net profit attributable to the parent company / net profit deducted in a single quarter were 6.032/4.44/417 billion respectively, with a year-on-year increase of – 2.4% / – 10.25% / – 11.43%. In 2022q1, the revenue / net profit attributable to the parent company / net profit attributable to the parent company after deducting non-profit was 5.212/7.23/726 billion, a year-on-year increase of – 5.15% / – 14.17% / – 12.9%. We expect that the decline in Q1 performance is mainly due to the impact of the epidemic on sales and the withdrawal of 100 million + for some inventories of boys and girls. In addition, the company plans to pay a cash dividend of 5.1 yuan (including tax) for every 10 shares, with a dividend rate of 10.47%.
Hla Group Corp.Ltd(600398) the gross profit margin of main brands has improved and new brands have maintained high growth rate.
Hla Group Corp.Ltd(600398) series brands have accelerated the expansion of Direct stores, and the gross profit margin has improved under product upgrading: the revenue in 2021 will be RMB 15.133 billion (compared with the same period in 2020 / 2019, + 9.91% / – 13.14% respectively), accounting for 77.86%. 22q1 revenue was 4.263 billion, a year-on-year increase of – 7.3%. Specifically, the year-on-year growth of revenue is mainly due to: 1) the online growth of main brands remains good; 2) The unit price of products will be increased under the promotion of brand strength (launch of popular IP such as “twelve zodiac”, “space creation”, “tiger and tiger vitality”) and high-end fabrics (antibacterial series, three defense T, mulberry silk series, etc.); 3) Speed up the opening of offline Direct stores (241 stores in 2021 and 53 stores in 22q1). In addition, the gross profit margin of the brand in 21 years increased from + 4.02 PCTs to 40.01% year-on-year, basically returning to the level of the epidemic period. Mainly due to the increase of Direct stores during the period and the superposition of product upgrading, the unit price of high value-added products increased and the discount control was better.
San Keno is generally sound: in 2021, it achieved a revenue of 2.260 billion yuan (respectively + 9.14% / 4.26% compared with the same period in 2020 / 2019), accounting for 11.63% of the revenue. Among them, the revenue of 22q1 was 306 million yuan, a year-on-year increase of – 4.3%. The brand’s design concept of “light business, fashion and personalization” complied with the industry trend and actively improved the customization level of professional wear. The intelligent manufacturing workshop will be put into trial production in 2022 and won the top ten leading enterprises of professional wear in China through product innovation and technological upgrading. In 2021, the gross profit margin was 51.57%, a slight decline.
Other brands maintained a high growth rate: in 2021 / 2022q1, all brands achieved an overall revenue of RMB 2.042486 billion (a year-on-year increase of + 27.14% / 16.7% respectively), accounting for 10.51% / 9.61% of revenue. The gross profit margin increased from + 5.66 / + 7.14 PCTs to 44.14% year-on-year in 2020 / 2019, with significant improvement. In terms of sub brands, we expect that in 2021, Yingshi’s revenue will be about 872 million, with a year-on-year increase of 38%, and the revenue of boys and girls will be about + 20% year-on-year. At present, the sub brands still have losses.
By channel: maintain high growth rate online and continuously optimize the structure offline
Online: e-commerce channels continued to make efforts, and Q1 gross profit margin increased significantly. From 2021 to 2022q1, the revenue reached 2.726538 billion yuan (year-on-year + 32.98% / – 6.33%), accounting for 14.02% / 10.64%. The logistics of 2022q1 was greatly affected by the epidemic. During the period, the company continued to focus on the mainstream platform and deeply layout the content e-commerce platform. Under the continuous drainage of “talent with goods + brand self broadcasting”, the growth of sales performance expanded. In terms of products, we will improve the online specialized products (the proportion is expected to reach 30% – 40% in the future). In terms of marketing, we have increased the construction of private domain traffic. The number of fans of Hla Group Corp.Ltd(600398) brand e-commerce platforms exceeds 40 million, and the number of fans of official wechat exceeds 10 million. In 2021 / 22q1, the gross profit margin increased from -2.28pcts / + 6.92pcts to 36.19% / 41.51% year-on-year respectively. We expect that the decline in gross profit margin in 21 years is mainly due to the large profits made by online live broadcasting activities and online olai last year.
Offline: optimize the structure and increase the shopping center channels, and the gross profit margin increased significantly. In 2021, the franchise end revenue was 14.701 billion yuan (compared with the same period in 2020 / 2019 + 7.62% / – 17.82%), and the direct business end revenue was 2.473 billion yuan (compared with the same period in 2020 / 2019 + 44.39% / 85.61%). In terms of store expansion, the company continued to optimize its structure. At the end of 2022q1, the number of franchise / Direct stores was 780 / 4912 respectively. When the number of stores at the franchise end decreases, the sales growth mainly comes from the improvement of the efficiency of franchise stores under the improvement of product strength and brand strength; The sales growth of the direct sales end benefits from channel expansion. In addition, in 2021, the offline comprehensive gross profit margin was + 4.54pcts to 42.71%, which increased significantly year-on-year, mainly due to the increase in the proportion of direct sales (the direct sales gross profit margin was 63.49% in the same period).
The gross profit margin increased steadily, and there is still room for improvement in the net profit margin. In 2021, the company’s gross profit margin was 40.64%, up from + 3.22pcts / + 1.18pcts in 2020 / 2019, and the gross profit margin in 2022q1 increased by 2.36pcts to 45.26% year-on-year. In addition, the increase in the proportion of direct sales to full sales has been driven by the continuous increase in the proportion of direct sales, which has also benefited from the increase in the proportion of direct sales to full sales. In terms of expenses, the rate of sales / management / R & D / financial expenses in 2021 was 16.11% / 4.93% / 0.62% / 0.03%, and the rate of sales expenses was + 2.73 PCTs year-on-year, mainly due to the impact of the epidemic in the same period last year and the increase of direct stores in this period. The improvement of efficiency promoted the decrease of the rate of management expenses by -2.04 PCTs year-on-year. Under the influence of the 2022q1 epidemic, the sales expense rate increased from + 4.07pcts to 17.35% year-on-year. Overall, the net interest rates of 2021 / 22q1 were 11.89% / 13.57% (year-on-year + 2.33pcts / – 1.39pcts), which still has room for improvement compared with that before the epidemic.
Healthy inventory and abundant monetary capital. At the end of 2021 / 2022q1, the inventory was 8.12/8.562 billion yuan respectively (up to + 9.49% / + 17.65% respectively), and the inventory turnover days in the same period were – 30.3 / + 52.4 days to 233.37/263.16 days respectively. Due to the increase of orders in 2021 and the impact of weather and epidemic in December, the inventory increased, but the inventory age structure was optimized, and the inventory within one year accounted for 71% (60% in 2020). The turnover days in the accounts receivable period increased from + 0.3 / + 1.4 days to 17.79/18.23 days respectively year-on-year. During 2021 / 2022q1, the net operating cash flow was RMB 4.361909 billion (respectively + 54.09% / – 24.25% year-on-year). At the end of 2022q1, the monetary capital was abundant, reaching RMB 13.441 billion, a year-on-year increase of + 12.23%.
Profit forecast and investment suggestions: the company continues to improve its product strength by improving product functionality, working together with popular IP, adjusting product structure and so on. At the same time, the layout of all-channel marketing, supply chain efficiency improvement, inventory structure improvement and channel optimization lay a solid foundation for long-term and stable development. In addition, the strong performance of the new brand has contributed new impetus to the company’s performance growth. In the long run, the company will continue to optimize the channel structure and improve the efficiency of the supply chain by playing the role of platform, promoting informatization and multi category layout, so as to create strong competitive barriers for the long-term development of the company. Considering the impact of the short-term epidemic, we predict that the performance in 2022 / 23 / 24 will be RMB 2.639/30.35/3.356 billion respectively (the value before 22 / 23 was RMB 3.47/3.92 billion), the corresponding EPS will be RMB 0.61/0.70/0.78 respectively, and the corresponding valuation at the current price will be 8 / 7 / 6 times respectively, maintaining the “buy” rating.
Risk warning: the recovery of terminal demand is lower than expected; The cultivation of new brands did not meet expectations; Inventory management risk; The public materials used in the research report may have the risk of information lag or untimely update.
