\u3000\u3 China Vanke Co.Ltd(000002) 614 Xiamen Comfort Science & Technology Group Co.Ltd(002614) )
Key investment points
Performance summary: the company released] the annual report of 2021 and the first quarterly report of 2022. In 2021, the company achieved a revenue of 7.93 billion yuan, a year-on-year increase of 12.3%; The net profit attributable to the parent company was 460 million yuan, a year-on-year increase of 4.3%; The net profit attributable to the parent company after non deduction was 140 million yuan, a year-on-year decrease of 65.7%. Non recurring gains and losses are mainly the investment income of 320 million yuan obtained by the company from the disposal of Filipino subsidiaries and forward contract hedging. In Q4, the company achieved a revenue of 2.11 billion yuan in a single quarter, a year-on-year decrease of 8.9%; The net profit attributable to the parent company was 150 million yuan, a year-on-year increase of 31.1%. In 2022q1, the company achieved a revenue of 1.58 billion yuan, a year-on-year decrease of 23.5%; The net profit attributable to the parent company was 30 million yuan, a year-on-year decrease of 73.5%. In addition, the company plans to distribute a cash dividend of 3 yuan to all shareholders for every 10 shares, with a total dividend amount of 190 million yuan and a dividend rate of 40.8%.
Focus on the core business of health massage, and the independent brand has grown steadily. In terms of business, the company fully focused on the main business of health massage, and the global health massage business achieved 5.5 billion yuan, a year-on-year increase of 23.8%. The company concentrated advantageous resources and vigorously promoted the development of independent brands of health massage. In 2021, the annual revenue was 2.8 billion yuan (accounting for 50.9% of the overall revenue of health massage), an increase of 33.1% year-on-year. Among them, the revenue of independent brands of global massage chairs was 2.15 billion yuan (accounting for 70.6% of the overall revenue of massage chairs), an increase of 30.8% year-on-year; The independent brand business of massage small electricity realized an income of 650 million yuan, a year-on-year increase of 41.3%. Under the background of high base, the revenue growth of health and environment business decreased, and the annual revenue was 1.02 billion yuan, a year-on-year decrease of 6.2%. In addition, we actively adjusted non core businesses and gradually reduced one-time businesses such as epidemic prevention materials. Other businesses decreased by 15.1% year-on-year in 2021.
Strengthen the global layout of brands and make concerted efforts in domestic and foreign markets. The company makes use of the accumulated Chinese and international markets and resources in the early stage to actively promote the development of its own brand business. In terms of health care and massage sector, (1) in the Chinese market, the independent brand “Ogawa Xiamen Comfort Science & Technology Group Co.Ltd(002614) ” continued to maintain its leading edge, significantly improved its operating efficiency, and achieved significant growth in revenue and profit of 47.2% and 252.2% respectively; (2) The international “Ogawa Xiamen Comfort Science & Technology Group Co.Ltd(002614) ” was distributed in the Southeast Asian market, and the annual revenue and profit increased by 11.6% and 56.1% respectively; (3) “Fuji” focuses on the Taiwan, China market. While achieving revenue growth throughout the year, the net interest rate increased by 0.4% year-on-year, achieving a net interest rate of 11.8%; (4) “Cozzia” is located in the North American market. The sales of online self operated websites exceeded US $5 million for the first time, and the revenue and profit both increased significantly; (5) “Mediana” is located in the European market. It is a leading family health brand in Europe, with the top three market share in Europe. In addition, in terms of health and environment, the company joined hands with Zhong Nanshan to establish the brand of “Dr. bri Hu” in 2013, and its products cover fresh air system, air purifier and other health and environment products. The company’s brand layout is perfect. In the future, with the further development of the company’s independent brand, it is expected that the company’s operation will be steadily improved.
Earnings performance is under pressure. The gross profit margin of the company has declined due to the sharp rise of raw materials, the fluctuation of RMB exchange rate against the US dollar, the rise of sea freight and other factors. In 2021, the company’s comprehensive gross profit margin was 29.9%, a year-on-year decrease of 6.1pp. In terms of expense rate, the company’s sales expense rate / management expense rate / financial expense rate were 14.8% / 9.5% / 1.8% respectively, with a year-on-year change of + 0.7pp / – 0.8pp / – 1pp. Throughout the year, the company’s net interest rate was 6.2%, a year-on-year decrease of 0.4pp.
Short term operating pressure remains. In terms of revenue, due to the repeated impact of the Chinese epidemic, the demand for massage equipment in China weakened, the growth rate of export slowed down under the background of high base, and the revenue of Q1 company fell. Under the background of continuous fluctuations in raw material prices and exchange rates, the company’s profit performance is still under pressure. The gross profit margin and net profit margin of 2022q1 company were 28.8% and 1.5% respectively, with a year-on-year decrease of 5.5pp and 4.3pp.
Profit forecast and investment suggestions. As a leading massage appliance company in China, the company has a rich brand matrix. With the recovery of demand outside China and the gradual stabilization of raw material prices and exchange rates, it is expected that the operation of the company will gradually improve. It is estimated that the company’s EPS from 2022 to 2024 will be 0.78 yuan, 0.91 yuan and 1.06 yuan respectively, maintaining the “buy” rating.
Risk warning: the risk of sharp fluctuations in raw material prices and RMB exchange rate, and the risk of terminal sales falling short of expectations.
