The main business is growing obviously, waiting for the business to improve and keep buying.
According to the company's 2021 annual report and 2022 quarterly report, the company achieved revenue of 7.927 billion yuan in 2021, + 12.25% year-on-year, and net profit of 458 million yuan, + 4.34% (retroactively adjusted to 459 million yuan in 2020), in line with our expectations (449 million yuan). 22Q1 revenue and home net profit increased by-23.70% and-73.46% respectively compared with the same period last year. The company's revenue and profits are under pressure due to the high prices of raw materials and shipping. As the cost pressure shows no sign of abating in the short term, we give the company a forecast of RMB 0.64,0.77 and 0.96 for EPS in 2022-2024 (previous value: 1.08G 1.90max-RMB). According to the consensus expectation of Wind, as of 2022-4-29, the average PE of the comparable company in 2022 will be 15x. We will give the company a target price of 9.60 yuan (the previous price is 15.31 yuan) and maintain the "buy" rating to the company's 2022 15xPE.
Comprehensively focus on the main business of massage and health care, strengthen the core competitiveness
In 2021, the company will fully return to the main business of massage and health care and develop its own brand. In terms of products, the income of the independent brand of massage and health care in 2021 was 2.8 billion yuan, an increase of 33% over the same period last year. By brand, Zhonggao "Aojiahua"
Offline and online revenue of brands increased by 27% and 66% respectively, and profits increased by 252%.
During the reporting period, the company increased R & D investment and accelerated manufacturing upgrading to strengthen its core competitiveness and brand influence. For non-core business, the company accelerated divestiture or adjustment, and the income of environmental health products and other industries declined to varying degrees.
Rising costs lead to a decline in gross profit margin, and investment income increases. In the current performance, the company's gross profit margin in 2021 was 29.86%, a year-on-year decline of nearly 4.5pct, mainly due to the erosion of raw material prices and exchange rate fluctuations on export (especially ODM business) gross profit margin. In 2021, the company's export gross profit margin was 29.58%, a year-on-year decline of 6.08pct. On the expense side, the sales expense rate in 2021 was 14.78%, which was basically the same as that in 2020; the financial expense rate was 1.84%, a year-on-year decline of nearly 1pct, mainly due to a reduction in foreign exchange losses in 2021. In addition, the investment income in 2021 was 320 million, an increase of 60% over the same period last year, mainly due to the divestiture of non-core business income, forward foreign exchange hedging income and structural financial income.
Short-term profit pressure still exists, exchange rate fluctuations have an important impact on the current performance, the impact of short-term high raw material prices will continue, or there will be a more obvious drag on 2022 annual earnings.
22Q1's gross profit margin was 28.8%, down 5.5 pct from the same period last year; the sales expense rate was 17.1%, which increased 1.1pct compared with the same period last year, and the profitability of the main business declined. However, due to the high proportion of overseas income of the company, exchange rate fluctuations have an important impact on performance. Thanks to the increase in forward foreign exchange settlement and sale income and fair value, 22Q1 investment income and fair value change income increased by 40% and 291% respectively compared with the same period last year.
Risk tips: declining demand for health care massage, weak multi-business performance, RMB appreciation.