2021 performance is in line with our expectations
The company announced 2021 and 1Q22 results: 2021 revenue of 2.371 billion yuan, an increase of 40% over the same period last year, and a net profit of 520 million yuan, an increase of 48% over the same period last year. In a single quarter, 4Q21 revenue was 512 million yuan, down 0.3% from the same period last year, and the net profit from home was 90 million yuan, down 15% from 1Q22 yuan, up 6.5% from the same period last year. The net profit from home ownership was 106 million yuan, down 5% from the same period last year, mainly due to the decline in land production and sales, and the expansion of furniture factories slowed down.
In 2021, the main product lines maintained rapid growth, and the comprehensive gross profit margin stabilized and increased slightly. In 2021, the company's revenue from edge sealing machines, CNC drills, cutting saws and machining centers each reached RMB 9.70, 4.97, 3.34 million yuan, an increase of 43%, 27%, 29%, 17%, respectively. In 2021, the scale effect was released to offset the upward pressure on raw material prices. The company's comprehensive gross profit margin slightly increased to 33.1% compared with the same period last year, of which the gross profit margin of edge sealing machines, cutting board saws and machining centers decreased by 2.0/3.4/0.5ppt to 44.6%, 29.3% and 17.0%, respectively, and the CNC drilling rate increased by 2.9ppt to 26.7%.
The net interest rate rose slightly and cash flow grew steadily. In 2021, the expense rate during the company period decreased compared with the same period last year, in which the sales and financial expense rate decreased 0.6/0.2ppt, and the R & D expense rate increased 0.3ppt compared with the same period last year.
In 2021, the company's net interest rate increased by 1.1ppt to 21.9% compared with the same period last year. In 2021, the net cash inflow of the company's operating activities was 551 million yuan, which was 136 million yuan more than that of the same period last year.
Trend of development
The demand of the real estate industry is under short-term pressure, and the trend of domestic substitution of medium-and long-term furniture manufacturing equipment is improving. 3Q21 commercial housing sales area and new housing construction area showed a double-digit decline every month compared with the same period last year, affecting the furniture market demand and the progress of furniture enterprises to expand production. The sales area of 1Q22 commercial housing and the new construction area of housing decreased by 13.8% and 17.5% respectively compared with the same period last year, and the growth of equipment demand of furniture enterprises was relatively slow. Looking forward, with the improvement of the accuracy, efficiency and life of domestic equipment, there is still a large domestic alternative space for middle and high-end furniture equipment.
Strengthen the self-control of parts and components and production capacity expansion. In recent years, the company has acquired or participated in Red Tooth Seiko, Saizhi, Central Robot, to enhance the automation and intelligent production capacity in core components, software and other aspects. In March 2022, the company announced that it planned to raise no more than 1 billion yuan in a non-public offering, of which Li Maohong, the controller of the company, planned to subscribe for 150-400 million yuan in cash. The company plans to invest 100 million yuan in furniture robot automation production line, Shunde high-end furniture equipment intelligent manufacturing base, supplementary liquidity of 100 million yuan each in 4-5-1.
Profit forecast and valuation
Taking into account the downturn in the real estate industry, we downgrade the 2022 EPS forecast by 22% to 1.74 yuan, and introduce the 2023 EPS forecast of 1.99 yuan. The company's current share price corresponds to 2022 11.3x/9.9xPE 2023. Taking into account the downward adjustment in earnings and the impact of the real estate boom on valuations, we lowered our target price by 30% to 26.12 yuan, corresponding to the 2022 15.0x/13.2x PE 2023, which has 33% upside room. Maintain an industry rating that outperforms.
Risk.
The continued downturn of the real estate boom caused furniture enterprises to expand production less than expected.