\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 515 Shantou Dongfeng Printing Co.Ltd(601515) )
The company released the first quarterly report of 2022: 22q1 achieved a revenue of 1.05 billion yuan, yoy + 7.8%; The net profit attributable to the parent company is 120 million yuan, yoy-50.7%, 22q1 gross profit margin is 32.2%, yoy-1.7pcts; Net cash flow from operating activities was -46.68 million yuan, yoy-143.8%.
The investment income fluctuates due to the project valuation. Excluding this factor, the performance is synchronized with the income growth
On the revenue side, affected by the epidemic in 22q1, some factories of the company were under started, but the overall revenue increased steadily. The optimization of cigarette label product structure supports growth, and is expected to increase the gross profit margin by improving design capacity, technological transformation and raw material substitution. The expansion of production and customers and the optimization of product structure have been steadily promoted. Through the integration and acquisition of the production capacity and yield of drug packaging enterprises, there is room for improvement in the gross profit margin; The new material business may release capacity in Q4, and the gross profit margin may be relatively stable. On the profit side, the gross profit margin decreased slightly, which is speculated to be mainly due to the adjustment of business structure. The company's investment project Naixue's tea, due to the high listing price in 2021, the decline in valuation dragged down the performance, and the investment income was -602.79 billion yuan, yoy-157.3%; The company still focused on business transformation. Excluding the impact of investment income fluctuations caused by changes in the valuation of investment projects, the net profit attributable to the parent company increased by about 12% year-on-year, which was basically consistent with the growth rate of revenue.
22q1 has significant cost reduction and efficiency increase. In order to lock in the cost, preparing goods in advance leads to a decrease in cash flow
On the expense side, the cost reduction and efficiency increase are significant. The sales / R & D / management / financial expense rates in 2022q1 are 3.5% / 3.7% / 6.6% / - 0.3% and yoy-0.6pct / - 0.1pct / - 0.4pct / - 0.2pct respectively; Cash flow: the decrease of the company's cash flow is mainly due to the year-on-year increase of accounts receivable and notes receivable, and the increase of cash payment for raw materials in order to lock in the cost due to the price fluctuation of chemical raw materials. 22q1 advance payment increased by 68.7% year-on-year. The prepayments of Guangdong Xinrui, a subsidiary, for polyester chips and Guizhou Chiba, for raw PVC and resin preparation, increased year-on-year. As of the end of Q1, the accounts receivable increased by 34.4% year-on-year.
Investment advice
The company has been deeply engaged in cigarette label for 30 years. It is the first echelon enterprise in the cigarette label industry and has the advantages of industrial chain and scale. The layout of the company is high growth track, the long-term space is opened, and the medicine bag and membrane business is growing rapidly. It is estimated that the net profit attributable to the parent company in 202224 will be RMB 830 / 10.1 / 1.2 billion respectively, corresponding to the current share price PE of 13X / 10x / 9x, maintaining the "buy" rating.
Risk tips
The price of raw materials fluctuates sharply, the growth of new business is less than expected, and the risk of sharp fluctuation of investment income.
