The company released its semi-annual report in 2022, with revenue of 3.153 billion yuan, year-on-year-20.07%, net profit of 13 million yuan, year-on-year-94.86%, non-net profit of 16 million yuan, year-on-year-92.14%, corresponding to Q2 single-quarter revenue of 1.57 billion yuan, year-on-year-16.05%, return-14 million yuan, year-on-year loss, deduction of non-net profit 35 million yuan,-69.76%. Under the background of high cost pressure and insufficient demand momentum at home and abroad, the company's operating pressure is prominent. It is expected that the demand-side pressure will continue in the second half of the year, but with the company reducing costs and efficiency + business structure optimization, multi-channel layout continues to advance, the follow-up performance improvement can be expected.
The operating pressure continues. In the first half of 2022, the company achieved revenue of 3.153 billion yuan, year-on-year-20.07%, net profit of 13 million yuan, year-on-year-94.86%, deducting non-net profit of 16 million yuan, year-on-year-92.14%; corresponding to Q2 revenue of 1.57 billion yuan, year-on-year-16.05%, return-mother net profit-14 million yuan, year-on-year loss, deducting non-net profit 35 million yuan, year-on-year-69.76%. During the reporting period, the company further focused on the main health care massage industry, accounting for 73.39% of revenue, which was 5.37% higher than that of the same period last year. However, under the superposition of high cost pressure, conflict between Russia and Ukraine, high inflation in the United States, frequent epidemic situations and other factors, the overall demand at home and abroad was insufficient, the consumer demand of the company's main health care massage business slowed down significantly, and the 1H22 business was under pressure. The business income of massage care and healthy environment is-13.16% and-24.38% respectively compared with the same period last year.
Profitability is under pressure. 22H1 achieved a gross profit margin of 29.3%, year-on-year-3.8pcts; homing net profit rate of 0.4%, year-on-year-6.2pcts, profit continued to be under pressure, mainly due to high cost pressure, declining demand at home and abroad and hedging losses. 22H1's sales / management / R & D expense rates are respectively year-on-year + 1.9pcts/+1.1pcts/+0.7pcts, mainly due to marketing promotion, channel expansion and strengthening of R & D investment. The financial expense rate is year-on-year-2.5pcts, which is the impact of exchange earnings, resulting in a return to the mother net interest rate of 0.4%, year-on-year-6.2pcts. The company's 22H1 realized 116 million yuan in cash flow from business activities, a substantial improvement over the same period last year, mainly due to focusing on the core main business and optimizing operation and management. It is expected that raw material prices are expected to decline, while the company actively promotes business structure optimization, cost reduction, efficiency and channel promotion, and multi-factor superposition is expected to lead to profit repair.
Export independent brands are steadily rising, and domestic demand continues to be weak. In overseas markets, the overall export revenue was-18.82% compared with the same period last year, mainly due to the decline in German market revenue. The overall income of the international independent brand "OGAWA O'Jiahua" is stable, of which the sales revenue of "cozzia" in North America is basically the same as the same period last year; there is a shortage of offline demand caused by repeated outbreaks in Southeast Asia, but the Malaysian and Singapore markets are still growing by 18.02% and 13.38%, respectively.
In terms of domestic sales, frequent outbreaks and weak market demand led to domestic sales of-21.83% compared with the same period last year.
The strategy of "preserving quantity, finding increment and controlling variables" is promoted to support the follow-up performance repair. Under the economic downward trend, the company puts forward the following medium-term business countermeasures: 1) Storage: in terms of services, services such as "lifetime warranty" and "free maintenance" are introduced to improve service quality and user stickiness; in terms of channels, offline expansion into Vientiane City, Sam and other system channels, online active layout of Douyin, Little Red Book and other emerging content e-commerce. 2) find increment: on the one hand, expand the market share through continuous marketing promotion and channel expansion, on the other hand, tilt the dominant resources to massage small appliances to seek new income increment. 3) Control variables: the establishment of a reduction committee, actively promote cost reduction and efficiency, the process of non-core business divestiture is smooth, and the business structure is continuously optimized. With the promotion of the above three strategies, the company's performance repair is expected.
Risk factors: the sales progress of independent brands is not as expected; the market demand fluctuates; the cost of raw materials and exchange rate fluctuates sharply; the impact of the epidemic exceeds expectations.
Investment advice: taking into account the slowdown on the demand side and the pressure may continue, downgrade the EPS forecast for 2022-23-24 to 0.41, 0.70, and 0.85 yuan (the original forecast is 0.79, 0.91, and 1.05), and the current share price corresponds to 18.3, 10.7, and 8.8 times the PE. With reference to the average PE 13x of Rongtai Health and Baikang in 2023, 13 times PE will be given in 2023, corresponding to the target price of 9 yuan. Downgrade to "overweight".