\u3000\u3000 Kidswant Children Products Co.Ltd(301078) (301078)
Event: the company released the performance forecast for 2021, which is expected to achieve an operating revenue of 8.773 billion yuan – 9.609 billion yuan, with a year-on-year increase of 5% – 15%; It is estimated that the net profit attributable to the parent company is 196 million yuan to 235 million yuan, a year-on-year decrease of 40% – 50%, and the net profit not attributable to the parent company is 109-140 million yuan, a year-on-year decrease of 55% – 65%.
Comments:
The company’s performance is under pressure under the multiple effects of repeated epidemic, declining fertility, new accounting standards, new stores are still in the cultivation period, and reduced rental subsidies, which is in line with follow-up observation. 2021q4 company’s single store revenue is under pressure, mainly due to: ① the impact of the epidemic spreads again; ② The number of newborns declined. According to the National Bureau of statistics, the number of newborns in 2019-2021 was 1468, 1200 and 10.62 million respectively. The number of newborns in 2021 fell by about 12%; ③ The company opened more than 70 new stores in 2021, mainly in the second half of 2021. It is still in a climbing period, which is a drag on profits. In addition, the new leasing standards have an impact on the net profit of about 55 million yuan to 70 million yuan in 2021. In 2021, large properties will no longer reduce the rent, but also drag down the profit. Under the influence of multiple factors, the company’s profit fell by 40% – 50%, benefiting from the opening of stores. The company’s operating revenue was 8.773 billion yuan to 9.609 billion yuan, with a year-on-year increase of 5% – 15%, showing a stable performance.
The logic of the long-term expansion of the mother infant track is significant. We pay attention to the follow-up epidemic repair, the continuous decline of the current fertility number, and the investment opportunities for stable fertility after the escort of follow-up policies. There is a vast space for mothers and infants. Under the background of the reform of the concept of child care, diversified consumption, product segmentation and category expansion drive the continuous increase of per capita expenditure. The policy of encouraging fertility will further promote the long-term and healthy development of the industry. Under the guidance of the policy, once the fertility situation stabilizes or rebounds, the sales of single mother and child retail stores are expected to return to the upward track, and the expansion of leading stores, mergers and acquisitions and the expansion of service business bring new growth space for offline chain leaders. The current birth level of newborns may have a significant negative impact on long-term social development and economic operation. The market pays high attention to it or there are policies to escort birth. Kwai Tong’s experience and subsidies are all the main regulatory mechanisms to boost fertility. There is still room for China to encourage fertility policy. Some local governments, state owned enterprises and head enterprises have already tried the water and family subsidies first.
Investment suggestion: Kidswant Children Products Co.Ltd(301078) is a mother and baby retail enterprise with endogenous cross regional expansion ability. The company’s unique chain store model puts forward high requirements for property, talent management, digital middle platform, brand and supply chain. Under the background that mother and baby stores are still operated in regional and single operation, and cross regional expansion depends on M & A, The company has achieved continuous endogenous store expansion throughout the country, with broad store space, continuous dilution of expenses and further release of profits. The short-term profit is affected by multiple factors such as the epidemic situation, the decline of fertility, the climbing of stores and so on. After the epidemic situation eases and the fertility is stable, the growth rate is expected to accelerate. Due to multiple factors such as the recurrence of the epidemic situation, the decline of fertility, the new accounting standards, the new stores are still in the incubation period, and the reduction of rental subsidies, we adjust the forecast of return to parent profit of the company from 2021 to 2023, From RMB 461 million, RMB 564 million and RMB 724 million to RMB 197 million, RMB 332 million and RMB 550 million, maintaining the overweight rating.
Risk tip: the birth rate is declining, the epidemic situation is repeated, and the number of stores opened does not meet expectations. The performance prediction is the preliminary calculation result of the company, and the specific financial data shall be subject to the disclosure announcement of the company.
