1H21 performance is in line with our expectations
The company announced 1H21 results: 1H21 income 535 million yuan, year-on-year + 38.0%, compared with 1H19 million 33.3%; return to the mother net profit 120 million yuan, year-on-year + 71.0%, compared with 1H19 million 81.1% corresponding to 2021 yuan, year-on-year + 26.4%, compared with 2019 million 30.9%; return to the mother net profit 40 million yuan, year-on-year + 10.0%, compared with 20119 million 36.7% company performance close to the upper limit.
Driven by the recovery of domestic and overseas demand for washing machines, the performance has grown rapidly: 1) since the second half of 2020, the recovery of demand for washing machines has superimposed the concentration of the global supply chain to China, resulting in a better demand for the washing machine industry chain and the rapid growth of the company's performance. 2) 1H21, industry online statistics, domestic sales / export shipments of washing machines are + 12.1% Universe 55.0% year on year. 1H21's domestic sales revenue is + 41.5% year-on-year, and export revenue is 35.3% year-on-year. 3) 1H21, the sales of general drainage pumps, special drainage pumps, washing pumps and condensation pumps are + 56.9% and 17.0% respectively compared with the same period last year. Among them, the major customer of the special drainage pump is Whirlpool, and Whirlpool suffered a setback in its production activities under the influence of the epidemic, which led to a decline in the company's corresponding product sales.
Financial analysis: 1) the company's gross profit margin has been squeezed by the rising cost of raw materials. 1H21 gross margin 34.6%, year-on-year-2.1ppt, compared to 1H19-1.9ppt. 2) affected by the epidemic, employee travel expenses, hospitality expenses and advertising expenses decreased, and the rates of 1H21 sales expenses, management expenses, and R & D expenses were year-on-year-0.5ppt/-1.0ppt/-2.0ppt to 6.0%, 4.7%, 3.4%, respectively. 3) due to the above effects, the 1H21 return net interest rate is 22.6%, compared with the same period of last year + 4.4ppt, compared with the 1H19+6.0pptb development trend 1) although the company's new businesses such as spa toilets and charging piles are still in the development stage, the company has global competitiveness in the global drainage pump market. At present, Whirlpool, Electrolux, Samsung, GE, Haier, Midea and other leading enterprises of home appliances are all company customers. During the epidemic period, the company's drainage pump market position has been further enhanced. 2) although raw material costs are rising rapidly, the decline in the company's gross profit margin is not obvious, which raises our growth forecast for the company in 2022.
Profit forecast and valuation
We keep our profit forecast for 2021 unchanged. As the company's global share of drainage pumps has increased and gross profit margins are expected to pick up in the future, we have raised our profit forecast for 2022 by 14% to 268 million yuan. The current share price corresponds to 20.1 times 2021 / 2022 / 16.4 times earnings. Maintain the neutral rating, raising the target price by 16.8% to 7.92 yuan, corresponding to 21.8 times 2021 price-to-earnings ratio and 18.2 times 2022 price-to-earnings ratio, which has 8.6% upside compared to the current stock price.
Risk.
Exchange rate risk; market demand fluctuation risk.
