\u3000\u3 China Vanke Co.Ltd(000002) 867 Chow Tai Seng Jewellery Company Limited(002867) )
Event overview
Chow Tai Seng Jewellery Company Limited(002867) released the annual report of 2021 and the first quarter report of 2022:
In 2021, the company realized a revenue of 9.155 billion yuan, a year-on-year increase of + 80.07%; The net profit attributable to the parent company was 1.225 billion yuan, a year-on-year increase of + 20.85%. By quarter, Q4's operating revenue in a single quarter was 2.682 billion yuan, a year-on-year increase of + 54.55%; The net profit attributable to the parent company was 219 million yuan, a year-on-year increase of - 27.29%. Benefiting from the implementation of the company's provincial representative model and the strength of gold products business, the company's revenue increased significantly in Q4 in a single quarter, but the profit side decreased year-on-year due to the adjustment of product structure. In terms of cash flow, the net cash flow from operating activities in 2021 was 197 million yuan, with a year-on-year increase of - 85.57%. Among them, the net cash flow from operating activities in Q4 was 1.066 billion yuan, with a year-on-year increase of + 590.78%, mainly due to the high growth of gold category income.
In 2022q1, the company realized a revenue of 2.754 billion yuan, a year-on-year increase of + 138.15%; The net profit attributable to the parent company was 290 million yuan, with a year-on-year increase of + 23.26%. Under the influence of the epidemic, the company continued a high growth trend on the revenue side, and the growth rate on the profit side changed from negative to positive month on month, which increased significantly, mainly due to the company's active promotion of various businesses, e-commerce and gold product exhibition business. In terms of cash flow, the net cash flow generated from the operating activities of 2022q1 company was 664 million yuan, a year-on-year increase of + 267.25%, mainly due to the significant year-on-year increase in revenue and the due recovery of accounts receivable in the previous year. In addition, the company plans to distribute a cash dividend of RMB 5.00 (including tax) for every 10 shares.
Analysis and judgment:
Sub products: high gold consumption boom & the company's provincial generation model is promoted, and the strength of gold products is remarkable.
In terms of products, in 2021, the company's plain gold jewelry, inlaid jewelry, other jewelry, franchise management services and brand royalties achieved revenue of 5.565 billion yuan, 22.29 million yuan, 214 million yuan, 228 million yuan and 694 million yuan respectively, with a year-on-year increase of + 232.22%, + 0.90%, - 13.88%, + 9.50% and + 25.43% respectively. In addition to other jewelry, other major businesses showed growth in varying degrees. Among them, plain gold jewelry increased significantly, It is mainly due to the high prosperity of the consumer market of gold products and the continuous development of the superimposed provincial generation model. In response to the structural changes in market consumption habits, the company quickly adjusted its product positioning from "diamond as the main product and gold as the popular product" to "gold as the main product and diamond as the core product", and K gold, platinum, emerald, pearl and Caibao as supporting sales products. In the second half of 2021, the company introduced the business model of Provincial Service Center to realize the rapid growth of business scale.
In 2022q1, the company's gold products continued a high growth trend. Among them, the wholesale revenue of gold products and inlaid products from the main channel franchise business was 1.706 billion yuan and 140 million yuan respectively, with a year-on-year increase of + 679.03% and - 28.89% respectively. Affected by the repeated epidemic and consumer confidence factors, the sales of inlaid products of the company decreased year-on-year, but the gold products benefited from the high boom of the gold jewelry market, with a significant growth rate.
Sub channels: the growth of franchise channels is significant, and the growth of 22q1 e-commerce business is accelerated.
In terms of channels, in 2021, the company's self operated (offline), Internet (online) and franchise channels achieved revenue of 1.260 billion yuan, 1.148 billion yuan and 6.522 billion yuan respectively, with a year-on-year increase of + 74.97%, + 18.17% and + 103.66% respectively. The self operated and franchise channels increased significantly. In terms of offline channels, the company continued to maintain a steady pace of store expansion. In 2021, the number of Chow Tai Seng Jewellery Company Limited(002867) brand terminal stores increased by 313 to 4502, including 324 franchise stores and 238 self operated stores respectively. In addition, the company optimized and improved the store structure and improved the overall store operation quality. The single store revenue and single store gross profit increased significantly. In 2021, the single store revenue and single store gross profit of the company's franchise stores were 1614400 yuan and 391500 yuan respectively, with a year-on-year increase of + 90.10% and + 17.55% respectively. In terms of online channels, the year-on-year growth rate decreased in 2021, mainly due to the high base and the impact of the transformation of some channel business models. In 2022q1, the company's self operated (offline), Internet (online) and franchise channels achieved revenue of 359 million yuan, 281 million yuan and 2.063 billion yuan respectively, with a year-on-year increase of + 4.33%, + 90.48% and + 228.79% respectively. The franchise channels continued their high growth trend and the growth of online channels accelerated. In terms of offline stores, the number of 2022q1 Chow Tai Seng Jewellery Company Limited(002867) brand terminal stores increased by 2 to 4504, including 9 franchise stores and self operated stores, - 7 to 4273 and 231 respectively. Franchise stores continued to develop.
Profit side: the product structure has changed significantly, and the profitability has decreased
In terms of profitability, in 2021, the company's gross profit margin and net profit margin were 27.31% and 13.35% respectively, with a year-on-year increase of -13.72pct and -6.59pct respectively. Among them, the gross profit margin and net profit margin in Q4 were 22.25% and 8.11% respectively, with a year-on-year decrease of -12.45pct and -9.30pct respectively. Among them, the gross profit margin decreased significantly, mainly due to the rapid growth of gold products with low gross profit margin and the change of product structure. According to business, In 2021, the gross profit margin of the company's plain gold jewelry and inlaid jewelry business was 10.59% and 29.74% respectively, with a year-on-year increase of -12.07 PCT and + 2.65 PCT respectively. The gross profit margin of gold products decreased significantly; By channel, in 2021, the gross profit margin of the company's self operated (offline), Internet (online) and franchise channels were 30.26%, 28.44% and 24.25% respectively, with a year-on-year decline of -11.61pct, -7.58pct and -14.97pct respectively. The decline of net profit margin is lower than the gross profit margin, which is mainly due to the good control of the company's period expense rate. In 2021, the company's period expense rate was 8.59%, with a year-on-year increase of -6.29pct, of which the sales expense rate, management expense rate, R & D expense rate and financial expense rate were 7.61%, 1.06%, 0.15% and -0.23% respectively, with a year-on-year decrease of -5.53pct, -0.89pct, -0.10pct and + 0.23pct respectively, of which the sales expense rate decreased significantly, Mainly due to the rapid growth of the company's revenue scale. In 2022q1, the gross profit margin and net profit margin were 20.17% and 10.49% respectively, with a year-on-year ratio of -20.25pct and -9.83pct respectively. Due to the rapid increase of the company's revenue scale of gold products, the product structure changed greatly, and the overall profitability declined. Among them, thanks to good period expense rate control, the decline of net profit margin was lower than the gross profit margin. In terms of period expense rate, the company's period expense rate in the single quarter of 2022q1 was 6.52%, with a year-on-year ratio of -6.79pct, The sales expense rate, management expense rate, R & D expense rate and financial expense rate were 5.71%, 0.80%, 0.12% and - 0.11% respectively, with a year-on-year increase of -5.89pct, - 1.04pct, - 0.14pct and + 0.29pct.
Investment advice
The company takes the lead in brand strength, continues to be optimistic about the promotion of the company's provincial representative model and the adjustment of product structure, and maintains the previous profit forecast. It is estimated that the company's revenue in 20222023 will be 12.248/15.146 billion yuan and EPS will be 1.36/1.56 yuan respectively, and the company's revenue and EPS in 2024 will be 18.415 billion yuan and 1.79 yuan respectively. According to the closing price of 12.58 yuan / share on April 29, 2022, the corresponding PE will be 9 / 8 / 7 times respectively. The valuation is at a low level, maintaining the "buy" rating.
Risk tips
Under the provincial agent model, the expansion speed of stores is lower than the expected risk; Risk that the progress of online live broadcast channel is less than expected; The recovery of terminal marriage market is less than the expected risk; The risk of intensified industry competition; Short term epidemic impact.
