Main points of investment:
Annual report performance slightly exceeded expectations, Q1 performance under pressure. In 2021, the company achieved a total operating income of 7.927 billion yuan, an increase of 12.25% over the same period last year, and a net profit of 458 million yuan, an increase of 4.34% over the same period last year. Q4 achieved a total operating income of 2.139 billion yuan in a single quarter, a decline of 7.60% over the same period last year, and a net profit of 142 million yuan, an increase of 26.33% over the same period last year. In the same period, the company announced that its quarterly report for 2022 showed that its total operating income was 1.584 billion yuan, down 23.70% from the same period last year, and its net profit was 28 million yuan, down 73.46% from the same period last year. It is expected that it is mainly caused by three factors: 1) the high base of Q1 revenue performance in 2021; 2) the fluctuation of the exchange rate of RMB against the US dollar; and 3) the sharp rise in raw material prices.
The development of independent brand is accelerated, and the status of health care massage plate is highlighted. In terms of business, 1) the income of the health care massage sector reached 5.497 billion yuan, an increase of 23.81% over the same period last year, and the proportion of revenue increased by 7.25 pcts to 71.26%. The status of the main business was highlighted, of which the massage chair business achieved revenue of 3.051 billion yuan in 2021, an increase of 28.74% over the same period last year, of which the revenue of independent brands reached 2.154 billion yuan, an increase of 30.81%, accounting for 70.59%. "OGAWA O'Jiahua" accelerated offline and balanced development in the domestic market, increasing by 27.07% and 65.61% respectively compared with the same period last year. The market share continued to increase, while the strategy of reducing costs and increasing efficiency was continuously strengthened. Revenue and profits increased by 47.17% and 252.22% respectively compared with the same period last year. Overseas revenue and profits of "OGAWA O'Jiahua" increased by 11.57% and 56.05% respectively, the localization strategy of the management team continued to advance, and revenue and profits increased in many countries and regions. The revenue of massage small electric business reached 2.446 billion yuan in 2021, an increase of 18.17% over the same period last year, of which the revenue of independent brands reached 646 million yuan, an increase of 41.32% over the same period last year, and the proportion increased to 26.41%. At the same time, the company launched a new massage small electric product under the brand name "OGAWA O'Jiahua". Independent brands continue to make efforts to accelerate the expansion of the overall business scale. 2) the healthy environment plate covers fresh air systems, air purifiers and other healthy environment products, which cover a wide range of products, among which BRI Dr. Hu testing Center officially obtained the "National CNAS Accreditation Laboratory" certification, plate R & D and testing capabilities accelerated, achieving revenue of 1.024 billion yuan in 2021, down 6.23% from the same period last year. 3) other businesses:
The company actively adjusted its development strategy and cut back on non-core businesses, including one-off businesses such as epidemic prevention materials. In 2021, the company's revenue from other businesses reached 1.192 billion yuan, down 15.07% from the same period last year.
ODM business accounts for a relatively high drag on the overall gross profit margin, profitability short-term pressure. In 2021, the company achieved a sales gross profit margin of 29.86%, a decline of 4.44 pcts compared with the same period last year, mainly due to the decline in the gross profit margin of the company, which accounts for a relatively high ODM, under the background of rising raw material prices and exchange rate fluctuations. In terms of period expenses, the company's 2021 sales expense rate increased by 0.66 pcts year-on-year to 14.78%, management / financial expense rate decreased by 0.60 pcts to 5.87% pcts year-on-year, and R & D expense rate decreased by 0.16 pcts to 3.65%. Finally, the company's 2021 net interest rate was 5.93%, down 0.35 pcts. In the first quarter of 2022, the company achieved gross and net profit margins of 28.83% and 1.52%, respectively, down 5.53 pcts from a year earlier.
Profit forecast and investment rating. In view of the current high pressure on raw material costs, we have lowered our previous profit forecast for the company from 2022 to 2023, which is expected to achieve a net profit of 524 million yuan (the previous value is 802 million yuan). The net profit forecast for 2024 is expected to achieve 725 million yuan, an increase of 14.4%, 18.8% and 16.4% respectively over the same period last year. The corresponding current price-to-earnings ratios are 10 times, 8 times and 7 times respectively. The company accounts for a relatively high ODM, and its gross profit margin will be greatly affected by rising raw material prices and exchange rate fluctuations in 2021, taking into account that profitability is expected to improve gradually and maintain a "buy" investment rating as orders are repriced in the new year.
Risk hint: raw material price fluctuation risk, exchange rate fluctuation risk.