Event
The company released the third quarterly report of 2021: in the first three quarters of 2021, the company achieved operating income of 5.08 billion yuan, an increase of 54.62% over the same period last year, and a net profit of 345 million yuan, down 28.62% from the same period last year.
Corresponding to 2021Q3, the income was 874 million yuan, an increase of 156.11% over the same period last year, and the net profit was-115 million yuan.
Comment
Driven by the growth of outdoor demand, high income growth. Benefiting from the extended leisure time spent at home by overseas residents under the influence of the epidemic, the demand for leisure products in family gardens has increased significantly: people around the world spent most of 2020 at home, with the normalization of epidemic prevention, people began to turn their attention to outdoor space. In 2021, the number of people planning to buy new outdoor furniture and accessories has more than doubled from last year, and consumers add more decorative and functional elements to outdoor furniture to better enjoy outdoor time. The company expects orders for the 2021-2022 business year (July 2021 to June 2022) to grow by more than 30 per cent year-on-year, and high growth is expected to continue in the fourth quarter of 2021 and 2022.
The gross profit margin fell and the expense rate increased. In the third quarter of 2021, the company's gross profit margin / sales expense rate / management expense rate / R & D expense rate / financial expense rate was 6.80% / 10.89% / 9.62% respectively, which was 6.16% /-1.88% compared with the third quarter of 2020-19.83pct/-12.82pct/-6.76pct/-9.14pct/-0.05pct. The decline in gross profit margin is mainly due to rising costs of raw materials such as steel, aluminum and plastics.
The company continues to build production capacity to support overseas market expansion. At the end of 2019, the company invested 500 million yuan to build a production line for outdoor leisure products in Henan Province. After the project is fully completed and put into production, it is expected to achieve an additional business income of 2 billion yuan. In addition, the company's peak sales season is April-August every year, and it is expected that after the price increase this year, the company's order growth will bring a substantial increase in volume and price, with great flexibility.
Investment suggestion: due to the increase in the price of raw materials, we downgrade the company's performance forecast, we expect the company's EPS to be 0.27 / 0.36 / 0.42 yuan respectively in 2021-2023, and the current stock price corresponds to 12.8x / 9.6x / 8.2x PE in 2021-2023.
Risk tips: raw material costs fluctuate, price increases fall short of expectations, performance forecasts and valuations fall short of expectations