Brief comment on performance
The company's 1H22 revenue of HK $2.88 billion, + 22.4%, gross profit of HK $1.53 billion, + 21.4%, net loss of HK $149 million, mainly due to the depreciation of HK $142 million against the US dollar in bank deposits held by the company in offshore renminbi. The net loss of the main business was HK $7 million, which was smaller than 1H21's loss of-HK $44 million.
Business analysis
Continue to launch professional products in subdivided areas, improve guest orders and improve profitability. 1H22 clothing cleaning / personal cleaning / household cleaning income 24.5 yuan 2.3 billion, + 25%, 7%, 12%, the fastest growth rate of clothing cleaning is mainly due to the launch of new products. In 2021, sterilized detergent and sports detergent will be introduced, and 1H22 will launch men's detergent. 1H22 accounts for 7% of sales of new products, rising to 9% from January to July, and is expected to be 10% + for the whole year. The unit price of the new product is 10% higher than the original product, 15% higher than the original product, and the gross profit margin is 10-15PCT higher.
The gross profit margin of 1H22 is 53%, which is mainly due to the increase in the price of raw materials, which is mainly due to the decline in 0.5PCT and 7.6PCT, which is expected to improve with the increase in the proportion of new products in the second half of the year. Raw material prices are + 50% year-on-year from January to August, and LDPE brings cost pressure with oil price fluctuations; the company hedges raw material price fluctuations by reducing discount rates / price increases / cost savings. It is expected that with the increase in the share of new products in the second half of the year, the gross profit margin for the whole year will be 53% Mel 55% (2H22 slightly higher than the previous month). The net interest rate is expected to be 8 per cent, 10 per cent (taking into account exchange losses), down 3-5PCT from a year earlier.
Offline distribution continues to sink and key customers / distribution channels increase. 1H22 online / offline distribution / offline key customers earn HK $1.47 billion,-10%, 98.5%, 91%. Dealers continued to cover the sinking market, with revenue growth of more than 100 per cent in 18 provinces, 420000 stores nationwide, + 32.9 per cent, year-on-year increases of 70 per cent in the number of third-to fifth-tier stores, and the number of dealers increased from 1400 to 1573. Offline market share increased to 29% of 2PCT.
Inventory turnover and accounts receivable turnover are accelerated. 1H22 inventory turnover 55 days, accelerated 21 days, 21 years began to carry out channel inventory reform, dealer inventory level accelerated from 3 months to the current 1-1.5 months. Accounts receivable turnover 123 days, accelerated 10 days, the company began to reduce the amount of accounts receivable in April to control financial risks.
Investment suggestion
1H22 is under pressure, and 2H22 is expected to optimize profits with new products & offline growth and performance improvement. The profit forecast for 22-24 is lowered by 16%, 14%, and 6%, and it is estimated that EPS 0.14, 0.18 and 0.22 for 22-24, which corresponds to a multiple of 22-24 PE on 40-32-26, maintaining the "buy" rating.
Risk hint
Product upgrade, channel expansion is not as expected, new product launch efficiency is not as expected.