\u3000\u3 China Vanke Co.Ltd(000002) 867 Chow Tai Seng Jewellery Company Limited(002867) )
Event description
The company issued the annual report of 2021 and the report of the first quarter of 2021, and achieved an operating revenue of 9.155 billion yuan / + 80.07% in 2021; The net profit attributable to the shareholders of the listed company was 1.225 billion yuan / + 20.85%. 21q4 achieved a revenue of 2.682 billion yuan / + 54.55%, and a net profit attributable to the parent company of 219 million yuan / – 27.29%; 22q1 achieved a revenue of 2.754 billion yuan / + 138.15%, and a net profit attributable to the parent company of 290 million yuan / + 23.26%.
Event comments
The introduction of the provincial representative model has significantly increased income, and the epidemic has affected the performance growth and is under pressure. In terms of revenue, the company achieved a year-on-year revenue of + 80% in 2021, mainly due to the significant growth of gold revenue, especially the significant growth of gold products in offline stores. At the same time, the business model of Provincial Service Center was introduced in the second half of the year, resulting in the rapid growth of gold product sales. Quarter by quarter, the revenue of 21q4 company was + 55% year-on-year, and the growth rate decreased month on month; 22q1’s revenue was + 138%, which was mainly affected by the continued high consumption of gold products and the year-on-year high growth of franchise business and online business. In terms of net profit, the company’s net profit in 21 years was + 21% year-on-year, and the profit growth rate was lower than that of revenue. It was mainly due to non operating factors, which led to the negative year-on-year growth of Q4 net profit. The provincial agent model of Q3 development overdraw some Q4 goods, while the Q4 orders would not be carried out normally due to the impact of the epidemic, and the purchase of franchisees in some advantageous regions was affected by the impact of the epidemic. The net profit of 22q1 was + 23% year-on-year, and the profit growth rate was lower than that of revenue. It was mainly affected by the repeated epidemic and consumer confidence, the year-on-year decline in the sales of mosaic products, and the high performance base in the same period last year.
The sales of franchise business + gold products increased significantly. In terms of products, the company’s revenue of plain gold / inlay / other jewelry in 21 years was 5.566/22.29/214 billion yuan respectively, with a year-on-year increase of + 232.22% / + 0.90% / – 13.88% respectively, and the revenue accounted for 60.79% / 24.34% / 2.34% respectively. Among them, the sales of gold products accounted for the largest proportion, the revenue increased significantly and the proportion increased, while the sales of inlay products were significantly restrained due to the impact of the epidemic and changes in the economic environment, and the revenue accounted for – 19.11pct. In the 21st year, the revenue of brand royalties was 694 million yuan, a year-on-year increase of + 25.43%, accounting for 7.58%. According to the business model, the revenue of the company’s franchise / self operated offline / e-commerce business in 21 years was 6.522/12.6/1.148 billion yuan respectively, with a year-on-year increase of + 103.66% / + 74.97% / + 18.1% respectively, and the proportion of revenue was 71.24% / 13.76% / 12.54% respectively. Among them, the revenue of franchise business accounted for the most and increased by 8.25 PCT year-on-year. The introduction of provincial representative model to carry out gold exhibition and sales led to sales growth; The growth rate of e-commerce business slowed down, which was affected by the high base formed by the rapid growth at the beginning of the outbreak of the epidemic in the same period last year and the transformation of some channel business models. 22q1’s franchise / self operated offline / e-commerce business revenue was RMB 2.063 billion / 3.59 billion / 281 million respectively, with a year-on-year increase of + 228.79% / + 4.33% / + 90.48% respectively, accounting for 74.90% / 13.04% / 10.19% respectively. Among them, the franchise business revenue accounted for the most and increased by 20.65 PCT year-on-year, while the self operated offline business revenue decreased by 16.73 PCT, and the e-commerce business increased significantly due to the year-on-year increase of + 110% of the revenue of gold products.
In the second half of the year, the expansion of stores was accelerated, and the performance of self operated stores was significantly improved. In terms of the number of stores, the company has 4502 brand terminal stores in 21 years, of which the number of franchise stores accounts for 94.7% and the number of shopping malls accounts for 55.7%. In the past 21 years, the company has added 734 new stores and reduced 421 stores, including 298 new stores in Q4. The efforts to expand stores have been accelerated in the second half of the year. The net number of stores increased in the past 21 years was + 75.84% year-on-year, and the number of terminal stores at the end of the period was + 7.47% year-on-year. In 22q1, 74 new stores were opened, which was basically the same as that in the same period last year. From the perspective of store efficiency, in the past 21 years, the average single store income of the company’s self operated stores was 5.227 million yuan / + 87.31%, and the average single store gross profit was 1.5816 million yuan / + 35.37%. Affected by the low base in the same period of last year, the performance of self operated offline stores improved relatively significantly; The average single store income of franchise business is 1.6144 million yuan / + 90.11%, and the average single store gross profit is 391500 yuan / + 17.55%, which is mainly affected by the change of income structure caused by the adjustment of business model.
The income structure was adjusted, the gross profit margin decreased, and the cost control efficiency was higher. In terms of gross profit margin, the overall gross profit margin of the company in 21 years was 27.31% / -13.72pct, and the gross profit margin of 22q1 was 20.17% / -20.25pct, mainly due to the change of income structure caused by the rapid growth of gold sales revenue. In terms of expense rate, the expense rate of the company during the 21-year period is 8.59% / -6.29pct, which is mainly affected by the year-on-year sales rate of -5.53pct; During 22q1, the expense rate was 6.52% / -6.79pct, which was mainly affected by the year-on-year sales / management rate of -5.89pct / -1.04pct. In the past 21 years, the company’s operating cash flow was 9.669 billion yuan / + 72.24%, which was mainly affected by the company’s innovative business model, the improvement of operation efficiency and the significant year-on-year growth of gold sales, resulting in a significant increase in revenue; 22q1 company’s operating cash flow was 664 million yuan / + 267.25%, which was negative in the same period of last year.
Investment advice
The company has an industry-leading chain channel network, with obvious advantages in cluster effect and resource integration. In the past 21 years, the company has made great efforts in gold products, with significant sales improvement. At the same time, the provincial representative model has been introduced to promote the expansion and acceleration of terminal channels, continuously improve the product distribution model, accurately enable store sales, and continuously improve brand influence and supply chain operation efficiency. In the past 22 years, the company continued to promote the provincial representative model and sub brand construction. It is estimated that the EPS from 2022 to 2024 will be 1.37/1.66/2.11 yuan respectively, corresponding to the closing price of the company on April 29 of 12.58 yuan, and the PE from 2022 to 2024 will be 9.2x/7.6x/6.0x respectively, maintaining the “buy-b” rating.
Risk tips
The epidemic affects the normal business activities of stores and residents’ consumption demand; Chain operation and franchise management risks; Risk of outsourcing production and product quality control.
