This report is read as follows:
The company announced the mid-year report of 2022, the operation is sound, the governance mechanism is expected to be further straightened out, and maintain the "overweight" rating.
Main points of investment:
Maintain the "overweight" rating. The company reported revenue of 3.328 billion in mid-2022, a drop of 6.6%, and a net profit of 191 million, in line with market expectations. Considering the influence of epidemic and other factors, we lowered the EPS of 22-24 years to 0.86,1.00,1.16 (- 0.22,0.28,0.36) yuan, and according to the 23-year average PE of comparable companies, lowered the target price to 12.00 yuan (- 0.71) yuan.
We estimate that the compound growth rate of the company's B-end business has been 30-40% in the past three years, but with the frequent occurrence of real estate risk events in the first half of the year, the growth rate of 2022H1's big B-end business has dropped by 30%. The retail end of the company, which has a strong brand, was affected by the epidemic in the first half of the year, with sales falling by 15% and 20%, judging that the decline in sales will continue in July-August. Taking into account the trend of integration and the demand of consumers for one-stop decoration, the overseas sales volume of bamboo and stone flooring acquired and expanded by the company has increased significantly in recent years, and the future development of multi-category and cross-category real estate may be a new growth direction.
The company's H1 gross profit margin decreased by 4.93 percentage points to 24% compared with the same period last year. From the perspective of sub-regional gross profit margin, except for East China, the gross profit margin is basically 1-2% lower than the same period last year, and the overall gross profit margin is basically stable against the background of rising raw material costs. East China gross profit margin dropped sharply by 7.13% compared with the same period last year, and we judged that it reflected the increase in factory costs caused by the repeated epidemic in the second quarter.
At the same time, due to the 68% increase in overseas business income, but the main export products are bamboo and stone flooring for distribution, with a gross profit margin of only 16.58%. Structural changes have pulled down the overall gross profit margin.
Operating indicators such as cash flow remained stable. By the end of the reporting period, the company had 2.035 billion cash on hand, up 166 million from the same period last year; total accounts receivable were 1.807 billion, up 322 million from the same period last year, and the risk receivable of the company as a whole was controllable. The asset-liability ratio remains at a low level of 32.97%.
Risk hint: the risk of sharp decline in real estate investment and rising cost of raw materials
