Fujia shares (603219)
Global clean electrical OEM leader. As a OEM of head cleaning appliances in China, the company is deeply bound with the world-famous vacuum cleaner brand shark (the company is the largest supplier of shark) and has the ability to design and manufacture core parts (the company is Dyson’s designated motor supplier). In 2021, the company’s revenue and net profit were 2.601232 billion yuan, an increase of 24.14% / 34.53% at the same time.
Highlight 1: R & D innovation + vertical supply chain to ensure OEM competitiveness. The company has strong independent R & D and industrial design capabilities. It has invented the industry’s original rolling brush hair cutting technology, which has better solved the pain points of ground brush hair winding when the product is used. It has registered patents in China, the United States and the United Kingdom. At the same time, the company has the design and manufacturing capacity of motor and PCBA, which are the core components of vacuum cleaner. It is Dyson’s designated motor supplier. From 2018 to 2021, the proportion of self-made motors and PCBA of the company has always been stable at about 80% + / 70%.
Highlight 2 of the company: the depreciation of RMB in 2022 brings short-term profit elasticity. The company’s export revenue accounts for a high proportion (86 + in 2021), which is greatly affected by exchange rate fluctuations and tariff exemption. In terms of exchange rate fluctuations, the depreciation of RMB is mainly beneficial to the company’s financial performance from the perspectives of thickening the converted income & performance and increasing exchange gains and losses. 1) From the perspective of order revenue conversion, we calculate that the depreciation of RMB is expected to increase the revenue and performance by 2% / 19% in 2022, and the thickening range in Q2 is higher than that in the whole year. 2) From the perspective of exchange income, it is assumed that the amount of USD monetary items of the company in 2022 is the same as that at the end of 2021, and the current exchange rate level may be thickened. The exchange income of the company is 31.95 million yuan. In terms of tariff exemption, we estimate that the negative impact of tariff increase on the performance end in 2019 is about 18.8%. Considering that the company did not share the tariff pressure with brands through product price reduction in 2021, the thickening effect of tariff exemption policy in 2022 on the performance end of the company may not be significant.
Highlight 3: new business is expected to open up the second growth curve. The company has arranged popular categories of floor washing machines. Its customers include JS global life and Fangtai. The products are launched this year. Sales side: the downstream capacity of the floor washer is expanded rapidly, and the short-term / long-term sales space is expected to be more than 4 times / 10 times. The industry is still in the leading stage of product strategy. In the short term, new brands are expected to rapidly increase their share by virtue of product differentiation and further catalyze the OEM demand of floor washing machines. Manufacturing end: at this stage, except that the head brand Tim can be self-produced, most of the other brands of floor washing machines are OEM. Under the trend of intensified industry competition, it is expected that the OEM demand of floor washing machine will continue to increase, and the production cost and capacity are the core competitiveness of the OEM factory. We estimate that in 2025, the construction scale is expected to reach nearly 8 billion yuan, and the company’s OEM of floor washing machine is expected to open up the second growth curve.
Profit expectation and investment suggestions. As the head manufacturer of clean electrical appliances, the company has the advantages of scale + self distribution ability and R & D. with the downstream expansion of clean electrical appliances and the expansion of the company’s new business & new customers, the company will open up a broader growth space. We expect the net profit of the company from 2022 to 2024 to be RMB 333 / 414 / 508 million, an increase of 43.65% / 24.53% / 22.58% at the same time. We believe that the reasonable market value of the company in 2022 is 9 billion yuan, corresponding to about 27 times of PE, which is still 16.6% larger than the market value of 7.707 billion yuan on May 20. For the first time, it will be rated as “overweight”.
Risk tips: the downstream prosperity of clean appliances has fallen, the expansion of new businesses and new customers is less than expected, the price of raw materials continues to rise, Vietnam’s policy changes, and the risk of order transfer of important customers
