Incident: The company achieved revenue of 1,186 million yuan in 2021, a decrease of -27.44%, net profit of 40 million yuan, a decrease of 81.43%, deduction of non-net profit of 33 million yuan, a decrease of 83.42%, and EPS of 0.17 yuan. The company plans to pay a dividend of 0.07 yuan per share (tax included). Short-term company performance is under pressure. Optimistic about the long-term development of independent brand business, the company achieved revenue/net profit of 322 million yuan/102 million yuan, a decrease of 3.34%/95.14%, the same decrease of 93.1%.
Comment:
“Independent brand+ODM two-wheel drive, the adult incontinence business is growing steadily. The company's own brand and ODM sales models are parallel. The independent brand business mainly focuses on adult incontinence products. The product categories include adult diapers, pull-ups, diapers, and nursing pads. In 2021, the company's own brand business achieved revenue of 391 million yuan, a decrease of 12.05%. Excluding the impact of epidemic prevention materials, the same increase was 6.05%. The company's “reliable” brand has been the top online single product sales champion for many years, and has a strong influence. In terms of ODM business, the company's ODM business achieved revenue of 778 million yuan in 2021, down 33.81% from the same period. Excluding the impact of revenue from epidemic prevention materials, it fell 28.01%, mainly due to a decline in domestic infant birth rate and a slowdown in downstream demand.
Multi-channel collaborative layout, and emerging retail models such as Tecom channels enjoy a strong first-mover advantage. In terms of offline channels, in addition to traditional KA and distribution models, the company combines the characteristics of use scenarios for incontinence products, actively explores special channels and new retail fields, and enhances the company's brand coverage and influence. The company focuses on four types of retail terminal customers, including key hospital kiosks and surrounding stores, key nursing homes, branded pharmacy chains, and social group charities, etc., and has a strong first-mover advantage in innovative channel layout. In terms of online channels, the company combines e-commerce platforms with direct management or online distribution models. In addition, it expands emerging channels such as live streaming and community group buying to achieve greater market coverage and business growth.
Gross margin growth fell short of expectations, and marketing layout continued to increase. Driven by the decline in gross margin of various businesses and the sharp contraction of the mask business with high gross margins, the company's overall gross margin was 18.64% in 2021, down 9.19PCT from the same period. By business, in 2021, the company's gross margins for baby care, adult care, and pet care products were 17.33%, 19.78%, and 8.15% respectively, with the same decrease |3.24PCT.6.76PCT and 10.67PCT. Among them, the sharp decline in the gross margin of adult incontinence products was mainly due to the company vigorously promoting its own brands through price reductions and moderate concessions. In 2022 Q1, the company's gross margin was 12.07%, down 13.3 PCT. In terms of expenses, the company's financial utilization rate fell by 1.9 PCT to -0.53% in 2021, mainly due to a year-on-year decrease in exchange losses and interest income from funds raised. Affected by factors such as increased marketing expenses and increased labor costs, the company's sales expenses rate reached 7.64% in 2021, an increase of 3.64 PCT; in terms of management expenses, management expenses increased by 1.61PCT to 3.13% in 2021, mainly due to cancellation of corporate social security and tax benefits, listing goods and depreciation Expenses have increased. In 2021, the company's inventory volume was 82.24 million tablets, an increase of 72.56%. This is mainly due to the fact that, on the one hand, the company took the initiative to increase inventory and inventory for its own brands. On the other hand, the delivery of ODM products affected by the epidemic was delayed. A contract was signed with Huahe Hua to help upgrade the brand, and omnichannel construction continued to strengthen. Looking ahead to 2022, the company will continue to adhere to the “independent brand+ODM” two-wheel drive development model, strengthen brand activation and channel development, and continuously enrich differentiated product lines. In the OBM business area, in terms of brand building, the company signed a contract with Huayhua Consulting in 2021, focusing on adult incontinence products, customizing unique strategies and creative services, strengthening consumer education and achieving comprehensive brand upgrading. In terms of channels, the company will further strengthen omnichannel construction, inject more brand promotion and differentiated products online; strengthen the distribution and business development of various channels offline to achieve rapid development based on complementarity and mutual assistance between online and offline. In the ODM business field, internally, the company adheres to the high-end ODM positioning of the Keyai factory, selects ODM strategic customers, and maintains the effective use of high-quality production capacity. Externally, the company further integrates product design, production solutions, and supply chain capabilities to enhance service capacity and stable supply capacity by providing complete problem solutions.
Profit forecasts and investment ratings;
As the company's business expansion fell short of expectations, we lowered the 2022-23 EPS to 0.36/0.57 yuan (original value was 0.56/079 million yuan), and added the 2024 EPS forecast to 0.75 yuan. The current stock price corresponds to 33.47 times PE in 2022. In the long run, the company, as a leading adult incontinence care company, will benefit from industry development. There is plenty of room for growth in performance and maintenance of the “buy” rating. Risk factors: risk of COVID-19 spread, increased industry competition, and fluctuating raw material prices.
