Chenguang Co., Ltd. ( Shanghai M&G Stationery Inc(603899) )
Key investment points
Epidemic & performance under high base is temporarily under pressure. The company achieved an operating 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 increase of – 16.04%. The performance of 2022q1 is under pressure, which is mainly affected by the epidemic situation and the high base.
The traditional retail business was impacted, and kelipu achieved rapid growth under the high base. In terms of business types, the revenue of traditional retail business (including ASUS) in 2022q1 was 1.7 billion yuan, a year-on-year increase of – 14.8%; The 2022q1 epidemic has affected the rhythm of students’ school opening, and the traditional business has been greatly impacted. The business income of klip was 2.146 billion yuan, a year-on-year increase of + 46.4%; Rapid growth is still achieved under the high base. The business income of the living hall was 265 million yuan, a year-on-year increase of + 9.0%; Among them, the income of Jiumu sundries club was 243 million yuan, a year-on-year increase of + 9.9%. By the end of 2022q1, there were 532 large retail stores in China, including 60 living halls and 472 Jiumu sundries clubs (including 151 franchisees and 2 Direct stores; an increase of 9 compared with the end of 2021). According to the products, the income of writing tools was 499 million yuan, a year-on-year increase of – 25.37%; The income of student stationery was 719 million yuan, a year-on-year increase of – 6.69%; The income of office stationery was 730 million yuan, a year-on-year increase of – 7.18%.
The gross profit margin of various products in retail business increased year-on-year. The gross profit margin of various products was 21.71% in 2022q1, with a year-on-year increase of -2.92pp; The year-on-year decline was mainly affected by the increase in the proportion of klip business (the gross profit margin of klip in 2022q1 was – 1.2pp to 9.3% year-on-year), and the gross profit margin of various products in retail business increased year-on-year. By category, the gross profit margin of writing instruments increased from + 1.29pp to 40.4% year-on-year; The gross profit margin of student stationery increased from + 1.11pp to 33.42% year-on-year; Gross profit margin of office stationery + 1.1pp to 29.24% year on year; The gross profit margin of other products increased from + 1.83pp to 46.56% year-on-year. The net profit margin of 2022q1 sales increased from -1.9pp to 6.76% year-on-year; The expense rate during the period was -1.52pp to 13.37% year-on-year; Among them, the sales expense ratio is -0.68pp to 8.08%; The management expense ratio (including R & D expense ratio of 1.07%) increased from -0.74pp to 5.38% year-on-year; The financial expense ratio increased from -0.1pp to -0.09% year-on-year.
Operating cash flow is under pressure due to the increase of kelipu’s share. In 2022q1, the company realized a net operating cash flow of 4.18 million yuan, a year-on-year increase of – 97.5%. The company’s traditional retail business income has declined, while the business income of klip has increased significantly, resulting in a total amount of notes and accounts receivable of RMB 2.187 billion at the end of 2022q1, an increase of RMB 426 million compared with the end of 2021, and a large increase in cash occupation. Klip’s business has obvious seasonality in cash recovery, and the company’s subsequent cash flow status is expected to improve.
Profit forecast and investment rating: the traditional business is gradually repaired. We maintain the previous profit forecast. It is estimated that the net profit attributable to the parent company in 20222024 will be 1.77 billion yuan, 2.12 billion yuan and 2.51 billion yuan respectively, corresponding to pe25, 21 and 18x. The company’s channel advantages continue to deepen, and the high-end strategy is expected to drive the continuous improvement of profitability and maintain the “buy” rating.
Risk tips: intensified industry competition, fluctuations in raw material prices, and the impact of education policies on demand.
