\u3000\u3000 Hangzhou Great Star Industrial Co.Ltd(002444) (002444)
Event: on the evening of January 14, the company released the performance forecast for 2021.
The performance in 2021 increased by – 5% ~ 5% year-on-year, mainly due to factors such as raw materials, freight, exchange rate and M & A
The company expects to realize a net profit attributable to the parent company of RMB 1.28 ~ 1.42 billion in 2021, with a year-on-year increase of – 5% ~ 5% (the median value is RMB 1.35 billion, with a year-on-year increase of 0%). In Q4, the net profit attributable to the parent company was 130 ~ 270 million yuan in a single quarter, with a year-on-year increase of – 48% ~ 5% (the median value was 200 million yuan, with a year-on-year decrease of 22%). The year-on-year decline in performance was mainly affected by the rise in raw material prices, the rise in international freight costs (a year-on-year increase of more than 100%), exchange rate (7% compared with 2020), M & A integration, epidemic situation and other factors.
The main business revenue increased by more than 30%. Under the industry clearing pattern, the company is expected to continue to improve the market share
The company expects the revenue to exceed 10 billion yuan in 2021, which is estimated to increase by about 17% year-on-year. The main business grew by more than 30%. According to the company’s 2020 income of personal protective equipment (PPE) such as masks is about 1.143 billion yuan, excluding the calculation, the main business income is about 7.4 billion yuan in 2020 and is expected to reach 9.6 billion yuan in 2021. We believe that due to the impact of costs, the industry is further cleared. The company is expected to continuously improve its market share by virtue of its advantages in supply chain, R & D and channel management. With the continuous development of e-commerce channels and power tools, its revenue will maintain rapid growth.
The downstream North American real estate boom continues, and the performance is expected to rebound in the medium and long term
The industry boom in the North American market continued. The inventory sales ratio of U.S. retailers in November was 1.09, which has been lower than the normal value (1.4) for 19 months. In addition, the 30-year average mortgage interest rate in North America is still at a historically low level. At present, the exchange rate difference between China and the United States has gradually narrowed over the same period. In 2022, the raw material cost and shipping cost are expected to fall, superimposing the company’s single product price increase. At present, the company’s gross profit margin is at a historical low. In the medium and long term, with the repair of adverse factors one by one, the company’s performance is expected to rebound.
The expansion of the three business segments has made steady progress and is expected to maintain high growth in 2022!
1) tools business: power tools are expected to take over and achieve more than $200 million in revenue in 2021.
2) laser measuring instruments: the categories are widened, the sales channels are optimized, and long-term orders from important customers are obtained, with a year-on-year increase of more than 100% in 2021.
3) storage containers: the epidemic situation in Europe recovered, and new orders were obtained from customers in the U.S. market, with a year-on-year increase of 62% in 2021h1. Keelung, a newly acquired storage container company, joined the consolidation in July. After integration, it is expected to make the company the largest storage container company in the world.
Profit forecast
Considering the medium and long-term North American market, the industry prosperity remains the same. It is estimated that the company’s net profit attributable to the parent company from 2021 to 2023 will be RMB 14 / 17 / 2 billion respectively, with a year-on-year increase of 2% / 27% / 15%, corresponding to P / E23 / 18 / 16x. As a leading hand tool in China, the company is expected to gradually increase its market share and maintain its “buy” rating under the background of industry clearing.
Risk tips
1) price fluctuation of raw materials; 2) The shipping situation continues to deteriorate; 3) Repeated epidemic situation; 4) The development of power tools is less than expected;
