Events:
Zhengzhong Design released its annual report for 2021, with an operating income of 1.905 billion yuan, an increase of 0.62% over the same period last year, a net profit of 18 million yuan, a decrease of 35.61%, and a deduction of 9 million yuan for non-return net profit, a decrease of 30.57% over the same period last year.
Comments:
The revenue structure has been significantly optimized, pushing the gross profit margin up. In 2021, the company's revenue increased by 0.62%. From the perspective of different industries, the revenue of decoration engineering, design and soft equipment business was 11.47,6.71 and 81 million yuan respectively, with the same increase of-11.98pct, 33.63pct and-6.3pct. Under the influence of the optimization of revenue structure, the company's gross profit margin increased by 1.47pct to 22.48% in 2021. From a sub-industry point of view, the gross profit margin of decoration engineering, design and soft equipment business increased by-5.03pct, 1.64pct and-1.80pct to 2.08%, 55.14% and 40.79%, respectively.
Credit impairment is prepared to be a drag on performance, and cash flow is outstanding. The company's performance decreased by 35.61% in 2021, which was slower than income, mainly because the loss rate of credit impairment increased to 3.21%, which mainly came from the loss of bad debts of notes receivable, accounts receivable and other receivables. The company's net operating cash inflow in 2021 was 309 million yuan, an increase of 120 million yuan over the same period last year, mainly because the company strengthened the control of working capital. The ratio of income to cash increased by 5.35pct and-0.64pct to 107.76% and 85.74% respectively, and the cash flow was beautiful.
Interior design leader, the brand advantage is obvious. In the 2020 Global Top 100 list of Interior Design published by the American professional interior design magazine, the company ranks first in the Asia-Pacific region, and has been rated as the "Top 500 Asian Brands" by the world brand laboratory for two consecutive years in 2019 and 2020. It is the first and only design brand on the list. The company's design capability has been recognized by many international top hotel brands, such as Reggie, Ritz-Carlton, Conrad, Intercontinental and so on, and its works have spread throughout Greater China, Southeast Asia, Europe and the United States.
Design + soft orders are abundant to ensure future performance growth. The newly signed order for the company's design business in 2021 was 1.175 billion yuan, plus 190 million yuan for soft equipment, an increase of 26.74% over the 1.077 billion yuan for the same period last year. In order to meet the growing demand of the company's design business, the company has 1116 designers by the end of 2021, accounting for 65.23% of the total number of designers, and the scale of designers is in the forefront of the interior design industry in the Asia-Pacific region.
Cover for the first time, give the company an "overweight" rating, with a target price of 10.01 yuan. It is estimated that the EPS of the company from 2022 to 2024 will be 0.89 1.11 1.36 yuan.
Risk hint: the duration of the epidemic exceeds expectations, and valuation and profit forecasts fall short of expectations.