\u3000\u3 China Vanke Co.Ltd(000002) 511 C&S Paper Co.Ltd(002511) )
Event:
The company released the annual report of 2021: the annual revenue of 2021 was 9.150 billion yuan, a year-on-year increase of 16.95%; The net profit attributable to the parent company was 581 million yuan, a year-on-year decrease of 35.85%; The net profit deducted from non parent company was 568 million yuan, a year-on-year decrease of 36.30%, corresponding to the basic earnings per share of 0.45 yuan.
The company released the first quarterly report of 2022: the revenue of 2022q1 was 1.884 billion yuan, a year-on-year decrease of 10.36%; The net profit attributable to the parent company was 133 million yuan, a year-on-year decrease of 50.82%; The net profit deducted from non parent company was 127 million yuan, a year-on-year decrease of 52.50%.
Guoyuan view:
Unconventional channels broke, and the income of household paper increased
Based on the continuously optimized product structure and continuously improved product power, the company’s construction at the channel side has promoted the steady growth of sales. Quarter by quarter, the 2021q1-4 company achieved revenue of RMB 2.102/21.46/20.27/2.875 billion respectively, a year-on-year increase of + 25.81% / + 10.29% / + 4.54% / + 26.75%, and net profit attributable to parent company of RMB 2.71/1.36/0.77/0.97 billion respectively, a year-on-year increase of + 47.81% / – 49.48% / – 64.72% / – 58.72%. The production / sales volume of the company’s household paper category was 150 / 148 million boxes, with a year-on-year increase of 28.14% / 26.23% respectively, realizing the prosperity of production and sales. The company has continuously established and improved its marketing network and adopted the development mode of five channels. In the past 21 years, the revenue of traditional channels (GT) / non-traditional channels (KA, AFH, EC and RC) was 4.391/4.344 billion yuan respectively, with a year-on-year increase of 3.45% / 29.48%; The gross profit margin was 34.90% / 39.17% respectively, which was -6.36 / -4.62pcts higher than that in 2020.
Stable R & D investment and good cost control
In 2021, the company’s comprehensive gross profit margin / net profit margin was 35.92% / 6.35% respectively, which was -5.40 / – 5.23pcts compared with 2020, mainly due to the rise in the price of raw materials. In terms of period expenses, the company’s sales expense rate / management expense rate / financial expense rate in 2021 was 21.71% / 3.73% / – 0.08% respectively, which was + 1.97 / – 0.94 / – 0.12pcts respectively compared with 2020. The increase in sales expenses was mainly due to the company’s active expansion and development of channel construction and increased strategic investment in brand publicity. The R & D expense rate in 2021 was 2.43%, which was -0.12pcts higher than that in 2020. The stable R & D investment made the company’s household goods in the forefront of the industry.
The matrix of high-end brand products has been recast, and the layout of all channels has been continuously improved
On the product side, as one of the leading enterprises in China’s household goods industry, the company has strong brand influence and scale effect. In 2021, focusing on the three scenes of home care, personal care and travelers, the company improved and optimized the three business segments of household paper, nursing products and health products. Among them, the “sun” brand was reorganized in its management team and combed its product lines, creating a more competitive product matrix, In the future, with the growth of consumers’ demand for high-end and differentiated household paper, it is expected to further seize the share of high-end products. On the channel side, the company adopts the channel sinking and intensive cultivation strategy of “direct selling to the county and distribution to the town”, and the marketing network has covered most prefecture (county) level cities in China, expanding the network layout of dealers; In addition, it has also actively expanded e-commerce channels / community group purchase / commercial consumption channels and continued to build a complete sales network.
Investment advice and profit forecast
We are optimistic about the long-term profitability of the company’s high-end brands and the continuous penetration of the company’s products under the multi-channel sales layout. It is estimated that the company’s revenue from 2022 to 2024 will be RMB 101.13/113.09/12.616 billion respectively, the net profit attributable to the parent company will be RMB 680789/913 million respectively, the EPS will be RMB 0.52/0.60/0.70/share respectively, and the corresponding PE will be 19.26/16.59/14.34 times respectively, maintaining the “buy” rating.
Risk tips
Risk of sharp rise in raw material prices; Risk of poor logistics transportation; Covid-19 is at risk of aggravating the epidemic; Industrial policy risk
