Incidents:
Dongyi Risheng released its 2021 annual report, achieving operating income of 4,292 million yuan, an increase of 24.52% over the previous year, and Guimu's net profit of 78 million yuan, a decrease of 57% over the previous year, after deducting 85 million yuan of non-return mother's net profit, an increase of 12.89% over the previous year.
Commentary:
The assembly business helped increase revenue, and Guimu's net profit growth rate was affected by property disposal. The company launched “Miyoshi Complete” products with good design, good price, and good quality, and opened 15 major assembly stores one after another.
At the same time, the richness and price advantages of the company's integrated products are obvious. The vertical supply chain sells a total of 4,700 SKUs, and the regional supply chain has 6,800 online SKUs. Under the influence of increased competitiveness in the finished products market, the company's home improvement industry revenue reached 3.703 billion yuan in 2021, an increase of 22.95% over the previous year, accounting for 86.27% of total revenue. The company's net profit returned to the mother in 2021 decreased 57% year-on-year, mainly due to profit of 84.3709 million yuan from the disposal of real estate last year.
The increase in raw material costs affected gross profit margins, and the cost rate declined during the period. The company's gross profit margin decreased by 129pct to 34.99% in 2021, mainly due to rising raw material costs. Among them, the cost of materials in the home improvement industry rose from 1,117 million to 1,513 million, an increase of 35.39% over the previous year. The company's expense ratio decreased by 0.65 pct to 30.67% during 2021. Among them, the sales, management, R&D, and financial expenses rates increased by 0.05 pct, -0.85 pct, -0.34 pct, 0.49 pct to 18.12%, 8.11%, 3.94%, and 0.51%, respectively.
Deepen multi-level marketing operations and strengthen brand building. The company develops and applies a variety of proprietary apps, national marketing and promotion tools, etc. to attract customers to the store, and increase customer stickiness through the DIM+ system and the Zhenjiayun display system. At the same time, the company uses technological home improvement and precision marketing systems to lay out multiple marketing ecosystems and strive to become a KOL in the home improvement field. The company uses rich media resources and strong linkage channels to make the company's brand younger and more trendy.
The efficiency of digital delivery has clearly improved, and core competitiveness is becoming more and more prominent. In terms of integrated business delivery, the SAAS system has opened up upstream and downstream business chains, service chains, and data chains. The overall on-time delivery rate has reached more than 95%, and customer satisfaction has reached more than 9.5 points. In terms of original business delivery, the 360° delivery management Tianyan system tracks delivery progress on a door-to-door basis. The overall on-time delivery rate reached over 90%, and customer satisfaction reached more than 9.5 points.
As the company's performance fell short of expectations, the rating was lowered to “increase holdings” and the target price was lowered to 7.88 yuan. The company's EPS for 2022-2024 is expected to be 0.45, 0.50, 0.56 yuan.
Risk warning: The development of the complete business fell short of expectations, and valuation and profit forecasts fell short of expectations