Event: the company's annual operating income of Q1 in 2022 was 288 million yuan, + 14.93% compared with the same period last year, and the net profit was 15 million yuan,-53.56% compared with the same period last year.
Rapid growth of the whole machine: from a business point of view, we estimate that the company's 22Q1 revenue is 120 million (only about 20 million in the same period last year, 21Q4 revenue is 140 million); traditional business 170 million, year-on-year-27%. The company's whole machine business is growing rapidly, and its revenue has basically reached the 21Q4 level, including a big boost. According to business staff data, the company's OEM floor washer product 22Q1 and 21Q4 promotion period turnover of 122.3%, Douyin in March activities during the floor washer GMV nearly 3000w. XIAOMI floor washer product 22Q1 sales of 16.36 million yuan, reaching half the level of 21Q4GMV. As Q1 is the off-season for clean appliances, as the second quarter enters the mid-year promotion of clean appliances, we expect the company's whole machine business to continue to grow rapidly. The decline in traditional business is mainly due to the high demand for clean electrical appliances industry benefiting from the epidemic in the past 21 years and the decline in customer demand for hoses and accessories at a high base.
The profit of the whole machine increased month-on-month: the company's Q1 gross profit margin in 2022 was 15.45%, year-on-year-10.57pct, net profit rate was 6.14%, year-on-year-6.6pct. From a business point of view, the gross profit margin of the whole machine is about 8.5%, while that of traditional business is about 20%. The decline in the company's net interest rate was mainly due to a year-on-year decline in revenue from the hose and accessories business, which had a higher profit margin. The profit level of the whole machine has improved significantly. According to the profit and loss reduction of minority shareholders in the 21 annual report and 22Q1 quarterly report, the net interest rate of Suzhou Shangteng, a subsidiary of the company's whole machine business, has reached 6.8%. 21A Suzhou Shangteng machine net interest rate is a loss.
Expand the scale of personnel and increase investment: in 2022, the rates of Q1 sales, management, R & D and financial expenses of the company are 1.53%, 5.94%, 3.04% and 0.91%, respectively, compared with the same period last year. + 0.59,2.56, + 0.23, + 1.48pct. The company expanded the scale of the whole machine business, and the staff of subsidiaries increased significantly, from 925 in 2020 to 1287 in 21 years, resulting in a corresponding increase in management costs.
Short-term macro factors led to an increase in machine inventory: the company's 2022Q1 inventory was 287 million yuan, + 63.06% year-on-year.
The company's inventory has increased sharply, and we expect that most of the goods in stock are OEM goods. We believe that on the one hand, due to the domestic epidemic, March has a certain impact on the company's logistics and transportation, on the other hand, due to the extension of shipping time on overseas routes, some of the products in the shipping date will be recorded as inventory. At the same time, we expect the decline in overseas demand to restrain the progress of overseas brand pick-up to some extent.
Abundant cash flow: the net cash flow generated by the company's Q1 business activities in 2022 was 105 million yuan, + 260.07% compared with the same period last year, of which the cash inflow from selling goods and providing services was 387 million yuan, + 51.02% from the same period last year. The company's adequate cash flow is mainly due to the increase in orders for the whole OEM business of vacuum cleaners and the increase in the refund of accounts receivable.
Investment advice: at present, the company binds a number of core customers, the future order quantity has a certain guarantee. At the same time, the company actively expand the scale of production capacity to ensure that there is sufficient capacity to complete customer mobility order demand. In the short term, the company's revenue performance fluctuates due to the influence of macro environmental factors, and it is expected that the company's business will gradually improve with the improvement of the macro situation in the future. According to the company's quarterly report, we have reduced the growth rate and gross profit margin of the company's traditional business, and increased minority shareholders' rights and interests. It is estimated that the company's net profit for 2022-2024 will be RMB 15,000,000 (the previous value is RMB2784m), and the corresponding dynamic valuation is 13.9x/10.2x/8.4x. Downgrade to "overweight" rating.
Risk tips: raw material price fluctuation risk; market competition risk; alternative product risk; exchange rate risk; OEM permeability is lower than expected.