Performance summary: the company released the 2021 annual report and the 2022 quarterly report. In 2021, the company realized revenue of 7.93 billion yuan, an increase of 12.3% over the same period last year. The net profit of returning to the mother was 460 million yuan, an increase of 4.3% over the same period last year. The net profit after deducting non-return was 140 million yuan, a decrease of 65.7% over the same period last year. The non-recurrent profit and loss mainly resulted from the investment income of 320 million yuan from the company's disposal of Philippine subsidiaries and hedging of forward contracts. Q4 achieved a revenue of 2.11 billion yuan in a single quarter, a decrease of 8.9% over the same period last year, and a net profit of 150 million yuan, an increase of 31.1% over the same period last year. 2022Q1 achieved revenue of 1.58 billion yuan, a decrease of 23.5% over the same period last year, and a net profit of 30 million yuan, a decrease of 73.5% over the same period last year. In addition, the company plans to distribute a cash dividend of 3 yuan for every 10 shares to all shareholders, with a total dividend amount of 190 million yuan and a dividend rate of 40.8%.

Focus on the core business of health care massage, the steady growth of independent brands. From the perspective of sub-business, the company comprehensively focused on the main business of health massage, and the global health massage business reached 5.5 billion yuan, an increase of 23.8% over the same period last year. The company concentrated superior resources and vigorously promoted the development of independent brands of health massage. In 2021, the annual income was 2.8 billion yuan (accounting for 50.9% of the total income of health massage), an increase of 33.1% over the same period last year. Among them, the revenue of the global independent brand of massage chairs was 2.15 billion yuan (accounting for 70.6% of the total income of massage chairs), an increase of 30.8% over the same period last year. The revenue of massage small power's independent brand business reached 650 million yuan, an increase of 41.3% over the same period last year. Against the backdrop of a high base, the revenue growth rate of the healthy environment business has declined, with annual revenue of 1.02 billion yuan, down 6.2 per cent from the same period last year. In addition, take the initiative to adjust non-core businesses, gradually reduce one-off businesses such as epidemic prevention materials, and other businesses dropped 15.1% in 2021 compared with the same period last year.

Strengthen the global layout of brands and make concerted efforts in markets at home and abroad. The company makes use of the domestic and international markets and resources accumulated in the early stage to actively promote the development of its own brand business. In terms of the health care massage sector, (1) in the Chinese market, the independent brand "OGAWA O'Jiahua" continues to maintain a leading edge, with a significant improvement in operating efficiency, with a substantial increase in revenue and profit of 47.2% and 252.2%, respectively; (2) the international "OGAWA O'Jiahua" is located in the Southeast Asian market, with annual revenue and profit increasing by 11.6% and 56.1%, respectively. (3) "FUJI" mainly focuses on China's Taiwan market. While achieving revenue growth for the whole year, the net interest rate has increased by 0.4% compared with the same period last year, achieving a net interest rate of 11.8%. (4) "cozzia" is located in the North American market, and the sales of online proprietary websites have exceeded US $5 million for the first time, and both revenue and profits have achieved great growth. (5) "medisana" is located in the European market and is a leading family health brand in Europe, ranking among the top three in market share in Europe. In addition, in the healthy environment sector, the company joined hands with Zhong Nanshan to create the "BRI call Doctor" brand in 2013, covering fresh air systems, air purifiers and other healthy environment products. The company's brand layout is perfect, and with the further development of the company's own brand in the future, it is expected that the company's management will improve steadily.

Earnings performance is under pressure. Due to the sharp rise in raw materials, fluctuations in the exchange rate of RMB against the US dollar, rising sea freight and other factors, the company's gross profit margin has declined. In 2021, the company's comprehensive gross profit margin was 29.9%, a decrease of 6.1pp compared with the same period last year. In terms of expense rate, the company's sales expense rate / management expense rate / financial expense rate is 14.8%, 9.5%, 1.8%, respectively, year-on-year change + 0.7pp/-0.8pp/-1pp. For the whole year, the company's net interest rate was 6.2%, a year-on-year decrease in 0.4PP.

Short-term operating pressure remains. In terms of revenue, due to the repeated impact of the domestic epidemic, the domestic demand for massage equipment has weakened, the growth rate of export has slowed down under the background of high base, and the revenue of Q1 company has declined. In the context of continuous fluctuations in raw material prices and exchange rates, the company's earnings performance is still under pressure. 2022Q1's gross profit margin and net profit margin were 28.8% and 1.5% respectively, down 5.5pp and 4.3pp from the same period last year.

Profit forecast and investment advice. As a leading company of domestic massage appliances, the company is rich in brand matrix. with the recovery of domestic and foreign demand, raw material prices and exchange rate are gradually stabilized, it is expected that the company will gradually improve. It is estimated that the company's EPS from 2022 to 2024 will be 0.78 yuan, 0.91 yuan and 1.06 yuan respectively, maintaining a "buy" rating.

Risk tips: raw material prices fluctuate sharply, RMB exchange rate fluctuates sharply, and terminal sales are less than expected.