\u3000\u30 Fawer Automotive Parts Limited Company(000030) 06 Chongqing Baiya Sanitary Products Co.Ltd(003006) )
Core view:
Events
In 2021, the company achieved an operating revenue of 1.463 billion yuan, a year-on-year increase of 16.97%; The net profit attributable to the parent company was 228 million yuan, a year-on-year increase of 24.89%; The non net profit attributable to the parent company was 211 million yuan, a year-on-year increase of 16.83%. The net operating cash flow was 197 million yuan, a decrease of 21.34% over the same period last year.
In the first quarter of 2022, the company realized an operating revenue of 432 million yuan, a year-on-year increase of 6.59%;
The net profit attributable to the parent company was 55 million yuan, a year-on-year decrease of 31.00%; The non net profit deducted from the parent company was 54 million yuan, a year-on-year decrease of 29.23%. The net operating cash flow was 18 million yuan, a decrease of 63.49% over the same period last year.
The middle and high-end self owned sanitary napkin brand “free point” continues to promote the growth of the company’s revenue;
Actively expand e-commerce channels and enrich and supplement the traditional advantageous offline core market. From the perspective of products, when the revenue of the company’s diapers and ODM business decreased in 2021, the growth of total revenue came from the revenue growth contribution of sanitary napkins, especially the “free point” of medium and high-end private brand products in sanitary napkins has become the core driving force of the company’s revenue growth. During the reporting period, facing the complex and changeable economic environment and fierce market competition pattern, the company took the market demand as the guidance, relying on its advantages in R & D, supply chain management and manufacturing, iteratively upgraded products to continuously optimize the quality and function of products and provide consumers with safer and more comfortable products. At the same time, accelerate the promotion of new products and key single products, continuously improve the proportion of medium and high-end products, and further optimize the product structure. During the reporting period, the company’s sanitary napkin revenue was 1.184 billion yuan, an increase of 25.04% over the same period last year. Among them, the revenue of “free point” sanitary napkin of medium and high-end products accounted for more than 95% of the company’s sanitary napkin revenue.
From a regional perspective, Sichuan and Chongqing, Yunnan Guizhou Shaanxi and e-commerce channels have all made important contributions to the growth of revenue. Among them, Sichuan and Chongqing, which has the traditional main advantage, has made the greatest contribution to the growth of revenue, and the e-commerce channels that the company focuses on the development have the fastest growth of revenue. The company has always adhered to the marketing strategy of “intensive cultivation of Sichuan Chongqing market, orderly expansion of China and simultaneous construction of e-commerce”. In 2021, while deeply cultivating the core markets in Sichuan, Chongqing and Yunnan, Guizhou and Shaanxi, the company complied with the trend of consumption upgrading and changes in consumption scenarios, actively developed e-commerce channels, increased investment in online marketing resources, and there were independent assessment indicators in the equity incentive plan. It can be seen that the promotion and implementation of channels within the company had a significant effect. The company sells goods to consumers by opening official flagship stores or franchise stores on e-commerce platforms such as tmall, jd.com and vipshop, and expands the e-commerce distribution system. At the same time, the company actively participated in emerging channels such as live broadcast, group purchase and o2o, further expanded marketing channels and achieved broader market coverage.
From a quarterly perspective, the seasonal fluctuation of product demand in the disposable sanitary products industry is small. For the corresponding consumer groups, women’s sanitary napkins, baby diapers and other products have a certain rigid demand attribute. According to the company’s historical data, it can be found that although there is no seasonal fluctuation in demand, because brands and channel chambers of Commerce carry out large-scale promotional activities to guide demand at specific time points such as “double 11”, consumers will stock up and buy at the promotion node because they predict their consumption demand within a certain period of time. In addition, compared with women’s sanitary products, the demand for baby diapers is more affected by seasonal fluctuations, and the sales volume is usually higher in autumn and winter. In the second and third quarters of 2021, the revenue increment narrowed slightly, which was consistent with the background of less promotional activities and weakening demand for diapers. After entering the fourth quarter, the demand in autumn and winter was large, superimposed with online promotion activities, and the revenue growth increased by a certain margin month on month. 22q1’s revenue growth slowed down under the dual effects of the high base and the impact of the epidemic in the first quarter of last year. The performance in the second half of the year is worthy of attention and expectation.
In 2021, the annual comprehensive gross profit margin increased by 2.05 PCT, and the period expense rate increased by 2.79 PCT; In 2022q1, the comprehensive gross profit margin decreased by 0.50PCT, and the period expense rate increased by 7.38pct
In 2021, the company’s gross profit margin increased. On the one hand, the company’s product structure continued to be optimized. Through product upgrading and iterative updating, it further consolidated the medium and high-end brand positioning of “free point” and brought about the improvement of diaper products. The gross profit margin of the two core categories increased by different ranges on average; On the other hand, the proportion of sanitary napkin sales with high gross profit margin increased continuously compared with the previous year, resulting in structural optimization and improvement of the overall gross profit margin of the company.
From the perspective of expenses, the company increased its investment in marketing promotion and R & D in 2021. Among them, the sales expenses increased by 57.018 million yuan to 279 million yuan compared with the previous year, and the sales expense rate increased by 1.32 percentage points to 19.06% year-on-year, mainly due to the year-on-year increase of employee salary of 168183 million yuan to 127 million yuan, and the year-on-year increase of advertising expenses of 305601 million yuan to 914799 million yuan; At the same time, the company has also increased its investment and expenditure on R & D material requisition (a year-on-year increase of 127704 million yuan), product design fee, R & D staff salary (a year-on-year increase of 7.7835 million yuan). In addition, the R & D expense increased by 210992 million yuan to 509552 million yuan compared with the previous year, and the R & D expense rate increased by 1.10 percentage points to 3.48%. In addition, the implementation of equity incentive for the purpose of attracting and retaining talents, as well as the growth of depreciation and amortization, management consulting and conference expenses, the management expenses increased by 148896 million yuan to 747702 million yuan compared with the previous year, and the management expense rate increased by 0.32 percentage points to 5.11%. The increase of expense rate during 2022q1 is mainly due to the increase of sales expenses caused by the increase of marketing promotion and employee compensation expenses and the increase of management expenses caused by the provision of equity incentive expenses.
Medium and high-end products play a core driving role, and R & D helps to continuously optimize the product structure
The “free point” brand series products positioned at the middle and high end continue to play a core driving role in revenue growth with 95% of the income of sanitary napkins. In addition to the company’s core product series of “free point” brand products, such as no feeling seven days, no feeling worry and comfortable sleep, it also includes the convenient and close fitting pants structure product sleeping pants series and natural, healthy and organic organic pure cotton series promoted by the company. By further enriching the categories of high-end products, it has driven the continuous growth of the sales of independent brand sanitary napkin products, and improved the profitability of the company with a high gross profit margin. In view of the market background that the “aging” trend drives the growth of adult incontinence products market, the company launched the medium and high-end “tannin” with the same positioning to meet the needs of the market. The company continues to increase R & D investment and promote product R & D innovation to help continuously optimize the product structure. In 2021, the company invested 509552 million yuan in various R & D expenses, an increase of 70.67% over the same period of last year.
Remarkable achievements have been made in R & D investment. In 2021, the company added 29 patents, developed and designed a variety of innovative products, expanded the organic pure cotton product line, and iteratively upgraded a series of products such as senseless seven days and comfortable sleep, which has been highly recognized by consumers and the market.
Actively lay out emerging channels such as e-commerce and promote the coordinated development of multiple channels
From the perspective of marketing channels, the company implements the development strategy of “intensive cultivation of Sichuan Chongqing market, orderly expansion of China and simultaneous construction of e-commerce”, and has established orderly expansion and hierarchical sales channels, mainly including distribution channels, Ka channels, e-commerce channels and other emerging channels. In addition, the company also adopts the cooperation mode of ODM to design, develop and produce sanitary napkins, diapers and other products for consumer goods enterprises. In terms of market expansion in China, on the one hand, the company has deeply cultivated the core markets in Sichuan, Chongqing and Yunnan, Guizhou and Shaanxi, optimized the dealer structure, expanded and expanded the sales network, and achieved stable growth of revenue and high profitability. On the other hand, the company has carried out the pilot Provincial Construction in peripheral areas and the promotion of national expansion mode in an orderly manner. The company adopts differentiated marketing mode according to the development degree and characteristics of different regional markets to promote the further growth of the company’s revenue. At present, the company’s products have entered the markets of Hebei, Shandong, Henan, Anhui, Lianghu, Liangguang and other regions.
In addition, in the context of consumption upgrading and changes in consumption scenarios, while deepening the offline business layout, the company also increased online business investment, actively explored e-commerce channels, and increased brand publicity and product promotion through online channels. In terms of e-commerce channel development, the company sells goods to consumers and expands the e-commerce distribution system by opening official flagship stores or franchise stores on e-commerce platforms such as tmall, jd.com and vipshop. At the same time, the company actively participated in emerging channels such as live broadcast, group purchase and o2o, further expanded marketing channels and achieved broader market coverage. In 2021, while continuing to cultivate the core markets in Sichuan, Chongqing, Yunnan, Guizhou and Shaanxi, the company actively explored emerging channels such as e-commerce, promoted Wuxi Online Offline Communication Information Technology Co.Ltd(300959) channel integration and multi-channel coordinated development, and achieved steady growth in sales revenue.
Investment advice
The company is mainly engaged in the R & D, production and sales of disposable personal hygiene products. It not only operates its own brands such as freepoint, Haozhi and tanning, but also provides ODM services for enterprises in other industries, covering sanitary napkins, baby diapers, adult incontinence products and other fields. From the perspective of products, the company provides safe, comfortable and high-quality personal health care products for consumers of all ages. The steady development of the free point brand of medium and high-end female sanitary products is the main driving force for the growth of the company’s revenue scale and the improvement of its profitability. From the perspective of channels, the company implements the development strategy of “intensive cultivation of Sichuan Chongqing market, orderly expansion of China and simultaneous construction of e-commerce”. On the one hand, it improves the construction of traditional channels such as dealers and Ka and consolidates the sales in advantageous areas such as Sichuan and Chongqing; On the other hand, actively participate in the construction of online e-commerce channels, break the constraints of geographical boundaries and further expand the influence of brands in the national market. To sum up, combined with the performance expectations put forward by the company in the equity incentive plan, we predict that the company will achieve revenue of RMB 1.822/22.142594 billion, net profit of RMB 257 / 3.03/354 million, corresponding to PS of 2.19/1.80/1.54 times, EPS of 0.60/0.70/0.82 yuan / share and PE of 16 / 13 / 11 times respectively in 2022, 2023 and 2024, maintaining the “recommended rating”.
Risk tips
The risk that the development of disposable sanitary products industry is less than expected; The risk of intensified market competition; The risk of brand channel promotion falling short of expectations.
