The company announces its 2021 annual report. In 2021, the company achieved revenue of 9.491 billion yuan, an increase of 81.38% over the same period last year, and a net profit of 667 million yuan, an increase of 10.87% over the same period last year, deducting 605 million yuan of non-return net profit, an increase of 9.69% over the same period last year. The profit growth is less than the income growth mainly due to: (1) the high price of raw materials in printing and dyeing business, the substantial increase in wastewater treatment costs, the double control of energy consumption; (2) the substantial increase in gold jewelry business income, the collection of processing fees, and low profit margins.

Sub-business: (1) Printing and dyeing business: realized income of 3.558 billion yuan (YOY+37.60%), total profit of 585 million yuan (YOY+35.61%), sales gross profit margin of 23.09% (YOY-1.49pct), sales profit margin of 16.44%, higher than the industry average 11.05pct. (2) gold jewelry business: realized income of 5.167 billion yuan (YOY+171.63%), sales volume of 65.57 tons (YOY+74.07%), mainly due to the recovery of consumer demand, the company real-time development of marketable products, expand the development of gold jewelry wholesale business; sales gross profit margin 4.47% (YOY-0.96pct). During the reporting period, Hang Min Baitai realized 110 million yuan in non-return net profit (YOY+74.23%); the cumulative net profit in 2018, 2019 and 2021 was greater than the cumulative promised net profit, fulfilling the performance commitment.

The sharp growth in the gold jewelry business has lowered the level of profit margins. In 2021, the company's gross profit margin and net profit margin were 13.53% and 7.98% respectively, down 6.80/4.89pct from the same period last year, mainly due to a substantial increase in gold jewelry business income and a low level of profit margin. The sales / management / R & D / financial expense rates are 1.12%, 1.71%, 1.83%, 0.09%, respectively, with year-on-year changes of-0.27/-1.04/-0.82/0.07pct, mainly due to the substantial increase in the company's operating income. The net cash flow of business activities was 627 million yuan, down 40.77% from the same period last year, mainly due to a substantial increase in raw materials and wastewater treatment costs.

Profit forecast and investment advice. It is estimated that the EPS from 2022 to 2024 will be 0.77 yuan per share, 0.85 yuan per share and 0.94 yuan per share respectively. With reference to the average PE in the past three years, the 2022 PE is valued at 10 times and the corresponding fair value is 7.65 yuan per share, maintaining the "buy" rating.

Risk hint. The risk of fierce market competition and the risk of stagnant demand.