\u3000\u30 Shenzhen Zhenye(Group)Co.Ltd(000006) 51 Gree Electric Appliances Inc.Of Zhuhai(000651) )
Event: Recently, the company released the annual report of 2021 and the first quarter report of 2022.
In 2021 / 2022q1, the company achieved a total operating revenue of 189654 billion yuan / 35.535 billion yuan, with a year-on-year increase of 11.24% / 6.02%; The net profit attributable to the parent company was 23.064 billion yuan / 4.003 billion yuan, with a year-on-year increase of 4.01% / 16.28%; By the end of the reporting period of 2021, the basic earnings per share of the company was 4.04 yuan / share; The weighted average return on net assets was 21.34%.
Key investment points:
In 2021, the company's business recovered steadily, and the air conditioning category continued to lead the industry. Compared with the situation under the influence of the epidemic, the company's revenue side fell sharply in 2020, and the company's main business revenue achieved restorative growth in 2021. In terms of products, the operating revenue of the company's air conditioners / household appliances / industrial products / intelligent equipment / green energy and other categories increased by 13.96% / 7.96% / 38.6% / 42.77% / 63.13% respectively year-on-year. Among them, the revenue growth rate of the main air conditioner industry increased significantly by nearly 29pct, although it has not yet returned to the same period in 2019 before the epidemic (mainly considering the weakening of 2021h2 real estate and the continuous rise of raw material prices, resulting in the weak overall market performance of the industry throughout the year), However, the company's air conditioning sales growth and market share remain stable. According to statistics, the company's air-conditioning sales in China in 2021 increased by about 7% year-on-year, about 1.5 percentage points higher than the industry as a whole, and ranked first in the industry with a market share advantage of 37.4%. With the continuous release of the effectiveness of the company's channel optimization and Reform in the future, various businesses and independent brands may further develop and continue to promote the steady growth of the company's revenue.
Profitability improved, and the gross sales difference in 2022q1 rebounded significantly year-on-year. In the face of the continuous fluctuation of the price of bulk raw materials, the company gradually digested the pressure on the cost side through price adjustment and product structure optimization, and its profitability was gradually restored. According to the released information, the net profit of the company in 2022q1 increased by 3.79% year-on-year, and the growth rate increased by nearly 20 percentage points month on month compared with 2021q4; In 2022q1, the gross profit margin (23.66%) decreased by 0.77pct year-on-year, but taking into account the change of sales expense rate, the gross sales difference increased by 1.51pct year-on-year, which was significantly improved compared with 2021q4 (- 0.32pct). In addition, the company's contractual liabilities in 2022q1 were 18.811 billion yuan, an increase of more than 3.3 billion yuan over the end of 2021, reflecting the positive delivery demand of the company's customers. Considering that the price of raw materials dominated by copper may gradually stabilize in the future, the company's moderate adjustment to the price of finished products and the continuous growth of orders from downstream customers, the company's profitability is expected to stabilize and recover.
The diversified layout is in-depth, and the green energy business opens up new growth space. While the company is mainly engaged in the steady development of household appliances, smart home and industrial manufacturing, the company actively distributes the green energy sector dominated by photovoltaic energy storage, lithium batteries and new energy vehicles through acquisition and self-research. According to the data disclosed in the annual report, the company's green energy business revenue in 2021 was 2.907 billion yuan, with a year-on-year increase of 63.13%, the fastest growth rate of all businesses, but the proportion of revenue (1.55%) and gross profit margin (6.11%) are still low, and there is still much room for improvement in the future. As a home appliance brand that entered the field of new energy earlier, the company has a long-term layout of the "photovoltaic + home appliances" track. In 2013, it independently developed the photovoltaic direct drive centrifuge system. At present, it is actively developing the "photovoltaic + energy storage + air conditioning" project, and is committed to creating a overturned zero carbon air conditioning system technology based on clean energy. With the vigorous promotion of the current national "double carbon" strategy, the layout of the company's green energy industry is gradually deepened, and the scale and profitability may continue to improve, contributing new growth points to the company's profit side.
The second phase of the employee stock ownership plan was announced, and the long-term incentive mechanism was gradually improved. The company recently released the second phase of the employee stock ownership plan. The total number of employees to be involved is no more than 12000, and the capital scale is no more than 1.55 billion yuan. The source is the repurchased shares in the company's special repurchase account. The stock scale is no more than 94728008 shares, accounting for 1.60% of the company's current total share capital. The plan will further strengthen the company's long-term incentive mechanism, enhance the consistency of the company's management, middle-level cadres and core employees on the company's operating benefits, and help to improve the company's governance structure. At the same time, the company plans to adjust some indicators in the first phase of the employee stock ownership plan, requiring that the roe in 2022 should not be less than 22%, and the net profit should not be less than 2 billion yuan higher than that in 2020. Considering that under the influence of many external factors, the company may face more uncertainty in production and operation, more attention will be paid to the steady improvement of operation quality in the future.
Maintain the company's "buy" investment rating. It is estimated that the company's diluted EPS from 2022 to 2024 will be 4.19/4.77/5.38 yuan respectively. Calculated according to the closing price of 33.23 yuan on May 20, the corresponding PE will be 7.93/6.96/6.18 times. As a leading household appliance enterprise, the company has strong brand and competitive advantages. Driven by a series of favorable policies such as "tax reduction and fee reduction" and "promotion fee" in China, the company's household appliance business may benefit fully and grow steadily. Meanwhile, with the gradual improvement of the diversification strategy represented by the new energy business, the company's revenue space is expected to be further opened.
Risk warning: the recovery of market demand is less than expected; The cost of raw materials continues to rise; Exchange rate fluctuation and overseas market expansion risk; Industry competition intensifies.
