1Q22 performance is lower than market expectations.
The company announced 1Q22 results: realized income of 370 million yuan, down 23.4% from the same period last year, net profit loss of 240 million yuan, down 10.7% year-on-year, deducting non-net profit loss of 250 million yuan, down 12.7% year-on-year, performance lower than market expectations. We expect 1Q22 losses to expand mainly because some areas are affected by the epidemic, and we will continue to pay attention to the improvement of the company's operating performance in the future.
Trend of development
1. Affected by the epidemic, new orders signed by 1Q22 have declined. By the end of 1Q22, the company has signed 1.79 billion yuan of unfinished orders (excluding completed parts), of which the home decoration / Seiko / public dress business is 1.52 billion yuan respectively. The company's newly signed orders in the first quarter of 2022 totaled 870 million yuan, down 23.3% from the same period last year, of which the home decoration / Seiko / public dress business was 8.4 billion yuan, down 13.3%, 86.5% and 73.1% respectively from the same period last year.
2. The gross profit margin decreased slightly, the expense rate increased significantly during the period, and pay attention to the follow-up improvement of profitability.
The company's 1Q22 gross profit margin is 32.8%, which is the same as minus 0.7ppt. The 1Q22 sales expense rate is 84.4%, the same increase of 34.9ppt, the management + R & D expense rate of 35.8%, the same increase of 9.4ppt, the financial expense rate of 1.7%, and the same increase of 0.8ppt. Under the combined influence, the company's 1Q22 net interest rate is-65.1%, which is the same as minus 20ppt.
3. The channel + business model is iterated constantly, and the digitization can help the performance to recover gradually. 1) Channel construction: the company helps market development by laying out offline retail stores with customer experience as the center and emerging online channels, and we expect to further increase the company's market share and brand power. 2) Business model: the company continues to promote the "three good integration" business model, which is based on digital capability + big store model + supply chain integration ability to improve the competitiveness of the whole business and meet the consumption needs of multi-level customer groups. rapidly expand the incremental scale of the assembly business 3) Digital reform: the company uses digital, information and other technical means to connect the whole business of home decoration and realize the digital operation and management of the whole chain. By strengthening the control and management of the project stage and the improvement of intelligent production efficiency, refine the supply chain operation and achieve good project delivery. We expect that with the deepening of digital reform, it will be beneficial to gradually shorten the construction period and accurate material consumption, and improve human efficiency. To reduce cost and increase efficiency.
Profit forecast and valuation
Taking into account the epidemic situation in some areas affecting the company's construction progress, as well as the continuous adjustment of business, we lowered the 2022 pebble 2023 net profit forecast of 20% pedigree to 130 million RMB. The current stock price corresponds to the 19 times / 16 times price-earnings ratio of 2022 pebble in 2023, maintaining the industry rating of outperforming. Considering that the effect of the company's digital reform will be gradually reflected in the future, we lower the target price by 7% to 7 yuan, corresponding to 2219 times of 2022 pedigree in 2023. There is 16% upside compared to the current share price.
Risk
The impact of the epidemic in some areas, real estate regulation and control exceeded expectations, industry competition further intensified.