\u3000\u3 Shengda Resources Co.Ltd(000603) 355 Kingclean Electric Co.Ltd(603355) )
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 7.95 billion yuan, a year-on-year increase of 26.5%; The net profit attributable to the parent company was 500 million yuan, a year-on-year increase of 53.2%. In Q4, the company achieved a revenue of 2.2 billion yuan in a single quarter, a year-on-year increase of 8.1%; The net profit attributable to the parent company was 24.823 million yuan, turning losses into profits year-on-year. In 2022q1, the company achieved a revenue of 2.35 billion yuan, a year-on-year increase of 16.8%; The net profit attributable to the parent company was 210 million yuan, a year-on-year increase of 10.6%. Excluding the impact of exchange rate changes, the company achieved a performance of 220 million yuan in Q1, a year-on-year increase of 26.6%. In addition, the company plans to distribute a cash dividend of 1 yuan per share, a total of 570 million yuan, with a dividend rate of 114.3%.
The three major businesses made steady progress, and the annual revenue increased rapidly. (1) In terms of independent brand business, annual sales increased by 43% year-on-year, of which online sales increased by more than 60% year-on-year, and offline sales resumed growth, with a year-on-year increase of more than 20%. By category, the sales of Lake vacuum cleaner increased by nearly 60% year-on-year, the online sales of biyunquan water purifier increased by nearly 70% year-on-year, and the brand influence was further expanded. (2) Benefiting from strong overseas demand, the company’s OEM business continued to grow. In 2021, the company’s ODM business sales increased by 23% year-on-year, of which the export business of garden tools and air purifiers increased by 50% and 95% year-on-year respectively, and the sales in the European market increased by 50% year-on-year. (2) In terms of core parts business, sales in 2021 increased by 28% year-on-year, including motor business increased by 21% and aluminum alloy precision parts business increased by 66%. In addition, during the reporting period, the company successfully acquired 100% equity of Shanghai Pajie, which helped the company speed up the business layout of new energy auto parts and further enhance the market competitiveness of the company’s core parts industry.
Profitability is under pressure. The company’s gross profit margin decreased by 20.9pp year-on-year to 2023.9pp, with a year-on-year decrease of 20.9pp. The main reasons for the decline of the company’s gross profit margin are: 1) the continuous appreciation of RMB against the US dollar during the reporting period; 2) The prices of bulk raw materials, chips and batteries have risen sharply; 3) The new standard adjusts freight to operating costs. In terms of expenses, the company’s sales expense rate / management expense rate / R & D expense rate / financial expense rate were 5.6% / 2.5% / 5.5% / 1% respectively, with a year-on-year change of 0.3pp / – 0.8pp/0.5pp / – 1.3pp respectively. After the freight is adjusted to the operating cost, the sales expense rate still increases, mainly because the company continues to increase the investment in the marketing expenses of its own brand. At the end of 21, the company signed delireba as the spokesman of the company’s clean appliances. Overall, the company’s net interest rate was 6.3%, with a year-on-year increase of 1.1pp.
Q1 revenue grew steadily and profits showed signs of repair. Under the multiple challenges such as the tense international situation, the spread of the epidemic, the obstruction of the supply chain and the appreciation of the RMB, the company’s Q1 revenue still achieved steady growth, mainly due to the continuous development of its own brand business and core parts business. 2022q1 company’s own brand offline sales revenue increased by more than 20% year-on-year; The online sales revenue of biyunquan and Jimmy brands increased by nearly 50% year-on-year. After the consolidation of Shanghai Pajie, the revenue of aluminum alloy precision parts business increased by nearly 800% year-on-year. In terms of profitability, Q1 company’s profit performance has recovered. The gross profit margin of 2022q1 company was 22.9%, with a year-on-year increase of 1.4pp and a month on month increase of 2.6pp; The net interest rate was 9%, with a year-on-year decrease of 0.5pp and a significant increase month on month.
Profit forecast and investment suggestions. With the concerted efforts of the three businesses, the company’s operation is expected to improve steadily. It is expected that the company’s EPS will be 1.51, 1.95 and 2.26 yuan from 2022 to 2024 respectively, maintaining the “hold” rating.
Risk warning: the price of raw materials may fluctuate sharply and the RMB exchange rate may fluctuate sharply.
