1H21 performance meets the forecast
The company announced results for the first half of 2021: revenue of HK $4.627 billion, year-on-year + 24.5% (compared with 1H19 million 4.4%), and net profit of HK $101 million, + 86.7% year-on-year (compared with 1H19-25.6%), in line with the performance forecast.
Under the repeated epidemic situation, the strategic brand advantage is highlighted. During the period, the company's revenue was + 24.5% compared with the same period last year. Excluding the business of + 16.9% ‰ affected by foreign exchange fluctuations, the core strategic brands increased by 23.7% year-on-year, of which CYBEX/gb/Evenflo increased by 50.4% compared with the same period last year. The proportion of revenue is 35%, 26.2% and 20.3%, respectively. CYBEX's revenue reached an all-time high and achieved strong growth in all major markets around the world, mainly due to the continued expansion of new market distribution platforms, accelerated launch of new products and the development of e-commerce business in Europe. Gb mainly benefited from the recovery of domestic demand, self-channel sales achieved double-digit growth. In addition, the blue-chip business was + 38.5 per cent year-on-year to HK $642 million and tactical brands + 4.1 per cent to HK $219 million when orders resumed.
Against the background of cost growth, profitability remains robust. 1H21's gross profit margin increased from + 0.8ppt to 42.4% compared with the same period last year, mainly due to the recovery of revenue and the increase in the proportion of strategic brands with high gross margins, offsetting the adverse effects of higher freight, exchange rates and raw material prices. In terms of expenses, sales / management / R & D expenses are respectively from + 0.3/+0.2/+0.4ppt to 25.7% to 25.7%, 9.1% and 4.3% respectively. The financial expense rate due to the decline in interest rates and loan portfolio optimization, year-on-year-0.9ppt to 0.6% ‰, the company's net interest rate is + 0.7ppt to 2.2% year-on-year.
Improved turnover efficiency and ample cash reserves. During the period, the company's inventory turnover days were 6 and 140days higher than those of 1H20 and 1H19 respectively, and accounts receivable turnover days were 47 days longer than those of 1H20 and 1H19 respectively. With the growth of terminal sales, turnover efficiency has returned to normal. In addition, the company has monetary assets of HK $1.657 billion during the period and has sufficient cash reserves to support the future development of the company.
Trend of development
Under the circumstances that the global COVID-19 epidemic is repeated, affecting terminal demand and shipments, the company, through its global business layout, strong product research and development capabilities, brand leading advantages, the expansion of distribution network and increased investment in online business, we expect to continue to drive annual sales growth and market share growth.
Profit forecast and valuation
We keep the company's 2021 Universe earnings forecast unchanged for 2022, with the current share price corresponding to 6.8 times Pmax E in 2021 / 2022, with the neutral rating unchanged and the target price of HK $1.46 unchanged. The corresponding 2021 pound 2022 is 6 times Pamp E, which has 10.4% upside compared to the current share price.
Risk
The epidemic repeatedly affects market demand and product shipments, raw material price fluctuations, exchange rate fluctuations risk.