\u3000\u3 Shengda Resources Co.Ltd(000603) 579 Shanghai Rongtai Health Technology Corporation Limited(603579) )
Event:
On April 28, 2022, Shanghai Rongtai Health Technology Corporation Limited(603579) released the first quarterly report of 2022. In 2022q1, the company achieved a revenue of 565 million yuan (+ 8.55%), and a net profit attributable to the parent company of 58 million yuan (- 15.02%).
Key investment points:
In 2022q1, the export revenue grew rapidly and the channel construction continued. 1) In terms of regions, the overseas revenue of 2022q1 company increased by more than 20% year-on-year. China’s revenue growth slowed down due to the closure of the epidemic. 2) By brand, the younger brand “momoda” 2022q1, which is positioned at the middle and low-end price, achieved a revenue of more than 50 million yuan, with a year-on-year growth rate of more than 100%. 3) On the channel side: the company plans to vigorously promote the store mode of street stores offline after the epidemic situation recovers, so as to improve the offline exposure of the company’s brand; New e-commerce companies, such as Tiktok, continue to make efforts online, and deeply cultivate live broadcast channels.
Gross profit margin improved month on month in 2022q1, and profitability was under short-term pressure. 1) Gross profit margin: in 2022q1, the gross profit margin was 27.44%, with a year-on-year decrease of -2.61pct, mainly due to the rise in the price of raw materials; Compared with 2021q4, it increased by 1.35pct and improved month on month. 2) Expense rate: in 2022q1, the sales / management / R & D / financial expense rate was 8.22% / 3.86% / 4.46% / 0.86%, with a year-on-year increase of + 1.07pct / + 0.61pct/- 0.60pct/+1.03pct。 3) Net profit margin attributable to parent company: affected by the decline of gross profit margin and the increase of sales, management and other expense rates, the net profit margin attributable to parent company in 2022q1 was 10.33%, with a year-on-year increase of -2.86pct.
Investment suggestion: the company is deeply engaged in the field of massage chairs. The dual brands of “Rongtai” and “momoda” cover the multi price segment market, continue to build a younger brand, promote channel construction in China, layout multiple markets overseas, and maintain the “buy” rating. We expect that the net profit attributable to the parent company from 2022 to 2024 will be RMB 314 / 387 / 442 million, corresponding to EPS of RMB 2.24 / 2.77 / 3.16, and the current share price corresponding to PE of 10.47/8.48/7.43 times.
Risk tips: repeated covid-19 epidemic, intensified industry competition, fluctuations in raw material costs, tight shipping capacity, exchange rate fluctuations, etc
