Overview of trade and retail: the darkest hour has passed, waiting for recovery. In 2021, the business retail sector’s revenue and net profit attributable to the parent company were – 22.09% and – 203.22% year-on-year respectively, almost the worst performance in recent five years. Since 2022, it has been affected by the epidemic in many places across the country, with a year-on-year income of – 34.80%, but the net profit attributable to the mother returned to positive growth of + 5.17% year-on-year. We believe that with the gradual control of the epidemic, the bottom recovery of the commerce and retail sector is worth looking forward to.
Cultivating diamonds: realizing growth potential and steadily improving profitability. In 2021, the revenue of the cultivation diamond sector and the net profit attributable to the parent company were + 22.04% and + 333.68% year-on-year respectively; In 2022q1, the revenue and net profit attributable to the parent company were + 13.57% and + 120.16% respectively year-on-year. With the increase of the proportion of diamond revenue cultivated with high gross profit margin, the price of industrial diamond continues to rise, and the profitability of the industry continues to rise. In the future, with the gradual implementation of new production capacity of major listed companies in the industry, the level of revenue and net profit attributable to the parent is expected to show greater flexibility.
Shangchao department store: multi-dimensional exploration to break the situation and return to the positive growth track. In 2021, the revenue and net profit attributable to the parent company of Shangchao department store were – 0.72% and – 77.09% year-on-year respectively, mainly affected by the losses of leading companies; In 2022q1, the segment revenue and net profit attributable to the parent company were – 1.18% and + 4.40% year-on-year respectively. We expect that with the decline of community group buying, the competition pattern will ease, and the superposition of leading companies will continue to explore supply chain and digital construction, test water storage member stores and expand home business. In the follow-up, it is expected to gradually usher in the inflection point of operation.
Gold and jewelry: the combination of risk resistance and the rise of national tide has led to a high boom. In 2021, the revenue of gold jewelry sector and net profit attributable to parent company were + 73.26% and + 3105255% respectively year-on-year; In 2022q1, the segment revenue and net profit attributable to the parent company were + 19.40% and + 10.40% year-on-year respectively. Considering that there is still great uncertainty in the current international situation and covid-19 epidemic, it is expected that the anti risk attribute of gold will still be favored by consumers; At the same time, under the background of the rise of national tide in recent years, Gufa Jinpu is expected to promote the industry demand to realize the simultaneous rise of volume and price.
Maternal and infant industry: under the catalysis of the three child policy, the long-term space is more promising. In 2021, the revenue of maternal and infant industry and net profit attributable to mothers were + 11.56% and + 9.60% respectively year-on-year; In 2022q1, the segment revenue and net profit attributable to the parent company were + 9.06% and + 5.37% year-on-year respectively. We believe that the three child policy is expected to play a positive role in driving China’s fertility rate, superimposing the general trend of consumption upgrading, and the medium and long-term space of the mother and baby industry is worth looking forward to.
Investment suggestions: cultivate the diamond sector to continue high economic growth, and recommend North Industries Group Red Arrow Co.Ltd(000519) , Henan Liliang Diamond Co.Ltd(301071) ; Shangchao department store is expected to usher in an inflection point of operation. It is suggested to pay attention to Yonghui Superstores Co.Ltd(601933) , Jiajiayue Group Co.Ltd(603708) , Chengdu Hongqi Chain Co.Ltd(002697) ; The gold and jewelry sector continues to benefit from the anti risk demand and the rise of national tide. It is suggested to pay attention to Chow Tai Fook, Chow Tai Seng Jewellery Company Limited(002867) , Guangdong Chj Industry Co.Ltd(002345) ; Under the catalysis of the three child policy, the long-term space of the mother baby sector is gradually opened. It is suggested to pay attention to Kidswant Children Products Co.Ltd(301078) , Shanghai Aiyingshi Co.Ltd(603214) .
Risk tip: the impact of the epidemic exceeded expectations, the price of raw materials rose sharply, and the competition pattern of the industry deteriorated.
