\u3000\u3 China Vanke Co.Ltd(000002) 867 Chow Tai Seng Jewellery Company Limited(002867) )
Key elements of the report:
On April 29, 2022, the company released the annual report of 2021 and the first quarterly report of 2022.
Key investment points:
The company’s annual performance increased rapidly, and the performance of 22q1 was brilliant: in 2021, the company achieved a revenue of 9.155 billion yuan (year-on-year + 80.07%), a net profit attributable to the parent company of 1.225 billion yuan (year-on-year + 20.85%), and a rapid growth in revenue and profit. In 2022q1, the company achieved a revenue of 2.754 billion yuan (year-on-year + 138.15%) and a net profit attributable to the parent company of 290 million yuan (year-on-year + 23.26%). In 2021, the company’s overall gross profit margin was 27.31%, a decrease of 13.72 PCT over the same period of last year, mainly due to the rapid growth of gold sales revenue, resulting in great changes in revenue structure; The rates of sales / management / R & D / financial expenses were 7.61% / 1.06% / 0.15 / – 0.23% respectively, with a year-on-year increase of -5.53 / – 0.88 / – 0.10 / + 0.23 PCT respectively.
Under the provincial generation mode, the growth of gold products is obvious, and the sales of inlay products are restrained: (1) inlay: in 2021, the company continued to increase the research and development of diamond products, and the product series iterated and developed in the direction of serialization and youth. In 2021, the company’s inlaid jewelry revenue reached 2.229 billion yuan (year-on-year + 0.90%), accounting for 24.34%, and the gross profit margin increased by 2.65 PCT to 29.74%; (2) Sujin: the company’s gold sector uses the promotion strategy of popular models to drive the popular system, and successively develops the characteristic IP sector, fashion sector, children’s sector, marriage and love sector and cultural gift sector, committed to creating a high value-added product series with brand representative for the company. In 2021, the company realized a revenue of 5.565 billion yuan of plain gold jewelry (a year-on-year increase of + 232.22%, mainly benefiting from the newly introduced provincial representative model, which directly supplied gold to franchisees through exhibition and sales, resulting in a significant increase in gold sales revenue), accounting for 60.79%, and the gross profit margin decreased by 12.07 PCT to 10.59%.
The growth of online business was steady, and the opening of offline franchise stores was accelerated: (1) online: in 2021, the company’s online business realized a revenue of 1.148 billion yuan (year-on-year + 18.17%), and the gross profit margin was 28.44% (year-on-year – 7.58 PCT). (2) Offline: under the provincial agent mode, the speed of expanding stores was increased. In 2021, the company’s self operated (offline) revenue was 1.260 billion yuan (year-on-year + 74.97%), and the franchise business revenue was 6.522 billion yuan (year-on-year + 103.66%). By the end of 2021, the number of terminal stores was 4502 (a net increase of 313, and the expansion efforts accelerated in the second half of the year), including 238 self operated stores (a net decrease of 11) and 4264 franchise stores (a net increase of 324).
Profit forecast and investment suggestion: as a leading enterprise of China National Gold Group Gold Jewellery Co.Ltd(600916) jewelry, the company has actively upgraded its products and store image in recent years to enhance its brand strength. In the third quarter of 2021, the provincial representative model will be launched to use the provincial representative platform to stimulate the vitality of channel development and quickly seize the market share. We expect that from 2022 to 2024, the company’s net profit attributable to the parent company will increase by 20% / 23% / 21% year-on-year respectively, and its EPS will be 1.34/1.65/1.99 yuan / share respectively, maintaining the “buy” rating.
Risk factors: the risk of repeated epidemic, the risk of channel expansion failing to meet expectations, and the risk of intensified competition.
