\u3000\u3 China Vanke Co.Ltd(000002) 867 Chow Tai Seng Jewellery Company Limited(002867) )
Key investment points
The net profit attributable to the parent company increased by 21% year-on-year to 1.22 billion yuan. In 2021, the company’s revenue was 9.16 billion yuan, a year-on-year increase of + 80%, the net profit attributable to the parent was 1.22 billion yuan, a year-on-year increase of + 21%, and the net profit not attributable to the parent was 1.19 billion yuan, a year-on-year increase of + 26%.
The increase in the proportion of gold products has a certain impact on the overall profit margin. In 2021, the company’s gross profit margin was 27.3%, a year-on-year decrease of 13.7pct, mainly due to the significant increase in the proportion of income from gold products, which reduced the overall gross profit margin. The gross profit margin of plain gold products is 10.6%, and that of inlaid products is 29.7%. In 2021, the company’s overall net profit attributable to the parent company was 13.4%, a year-on-year decrease of 6.6pct. The cost is controllable as a whole.
The company quickly adjusted its product positioning to comply with the consumption trend, and the gold products performed well. In 2021, the company’s mosaic revenue was 2.23 billion yuan, a year-on-year increase of + 0.9%, and the plain gold revenue was 5.565 billion yuan, a year-on-year increase of + 232%, accounting for 61% of the revenue, with a significant increase. The brand use fee was 694 million yuan, a year-on-year increase of + 25.4%. On the one hand, the company is vigorously promoting gold products and increasing the proportion of gold products. On the other hand, it is also related to the change of the settlement method of the company’s gold products. In recent years, with the continuous progress of process design, gold products have regained the favor of the younger generation of consumers. The company quickly adjusted its product positioning as “gold as the main product and diamond as the core product”. Build the consumption matrix of gold products and create targeted products.
In the steady expansion of the company’s stores, the provincial representative model is expected to help accelerate the expansion of stores. From the perspective of different channels, the franchise business / offline self-supporting business / online self-supporting business achieved a revenue of 6.52 billion yuan / 1.26 billion yuan / 1.15 billion yuan respectively, with a year-on-year growth rate of 104% / 75% / 18% respectively. In 2021, the company introduced the provincial representative model to integrate customers and channel resources. By the end of 2021, the number of stores of the company had reached 4502, the net increase of 313 stores, and the number of stores in third and fourth tier cities accounted for 70%. After the provincial representative is launched, it needs a certain running in period, and we expect to achieve greater results in 2022.
A good start was achieved in the first quarter of 2022, and the epidemic began in March, which disturbed the company to a certain extent. In 2022, the Q1 revenue was 2.75 billion yuan, a year-on-year increase of + 138%, and the net profit attributable to the parent company was 290 million yuan, a year-on-year increase of + 23%. Gold still showed a high growth rate, driving the overall revenue growth. According to the operating data, the revenue from January to February was about 2.319 billion yuan, a year-on-year increase of + 203%; The net profit attributable to the parent company is about 218 million yuan, a year-on-year increase of + 36%. We estimate that the revenue in March 2022 will be 435 million yuan, a year-on-year increase of + 11%, and the net profit attributable to the parent company will be 72 million yuan, a year-on-year decrease of 4%. In March, the operation of the company began to be affected by the local epidemic.
Profit forecast and investment rating: Chow Tai Seng Jewellery Company Limited(002867) is the leading gold jewelry brand in China, with outstanding advantages in channel scale. It is expected to accelerate the expansion of stores under the provincial representative mode. Considering the impact of the epidemic on offline gold jewelry, we conservatively lowered the company’s net profit attributable to the parent company from 1.45/1.73 billion yuan to 1.39/1.65 billion yuan in 202223, and it is expected that the net profit attributable to the parent company in 2024 will be 2 billion yuan, and the latest share price will be 10 times that of PE in 2022, Maintain the “buy” rating.
Risk tip: the epidemic situation is repeated, the recovery of offline consumption is less than expected, and the expansion of stores is less than expected
