Performance review
1Q22 performance is in line with our expectations
The company's 1Q22 income was 950 million yuan, an increase of 16.4% over the same period last year, and the net profit was 140 million yuan, an increase of 3.8% over the same period last year. The net profit after deducting non-return was 130 million yuan, an increase of 3.4% over the same period last year, which is in line with our expectations.
The company's main business income was 150 million yuan, down 0.1% from the same period last year, among which brand integrated services business revenue gradually returned to stability since the downward trend last year. 1Q22 omni-channel GMV 8.2 billion yuan, down 10% from the same period last year, of which the platforms of BABA, Pinduoduo, JD.com and Vipshop Holdings Limited accounted for-28%, 11%, 23%, 63%, 40%, 35%, 14%, 2% and 9%, respectively, of the platforms Douyin & Kuaishou Technology. We estimate that the monetization rate of 1Q22 is about 1.9%, which is a year-on-year increase in 0.4ppt.
The revenue of time interconnection business was 790 million yuan, an increase of 20.3% over the same period last year, mainly due to the new agent categories in OPPO channels and the continuous optimization of stock business in various channels.
Year-on-year decline in gross profit margin 3.0ppt, organizational optimization and cost reduction to promote sales and management expense rate to reduce 2.3ppt compared with the same period last year. 1Q22 gross profit margin fell 3.0ppt to 20.4% year-on-year, which we think is mainly due to a lower share of revenue from modern services with high gross margins. The rate of sales and management expenses has been reduced to 4.8% compared with the same period last year, which we believe is mainly due to the company's strengthening the optimization of its internal organizational structure, and the newly developed business department partnership model has reduced labor costs, reduced costs and increased efficiency, and jointly promoted the reduction of operating expenses. Net profit margin fell 1.8ppt to 14.7 per cent year-on-year.
Accounts receivable increased significantly, and operating cash outflow increased compared with the same period last year. 1Q22 accounts receivable increased by 50 per cent to 1.37 billion yuan compared with the same period last year, mainly due to the increase in the scale of factoring loans during the period. Other receivables fell 60 per cent year-on-year to 40 million yuan, mainly due to the conversion of 100 good acquisition deposits held at the beginning of the period into acquisition funds. The operating cash outflow was 370 million yuan, compared with 280 million yuan in the same period last year, mainly due to the increase in the scale of factoring loans during the period and the decrease in rebates from some customers due to the 1Q22 epidemic.
Trend of development
The company 1Q22 has completed the acquisition of 100 good series of trademarks, and the brand matrix continues to be rich. We expect that Centra (China) and 100 good series brands will make new contributions to the company's GMV growth in the future.
Profit forecast and valuation
The current stock price corresponds to 14 times 2022 EPS 23e Pmax E, while the current stock price remains neutral. Considering that the near-term policy is positive to drive the valuation up, the target price will be raised by 6% to 5.29 yuan, corresponding to 18x2022max 23 Pmax E, which has 10% upside space compared to the current stock price.
Risk.
The operating rules of the e-commerce platform have changed, the growth of a single channel is not as expected, and the development of new business is not as expected.