Event

The company released its semi-annual report for 2022: operating income in the first half of 2022 was 576 million yuan, down 8.59% from the same period last year; net profit from home was 554900 yuan, down 99.18% from the same period last year; deducting non-return net profit from-2.8179 million yuan, down 104.36% from the same period last year; basic earnings per share was 0.002 yuan per share, down 99.

39%. In the second quarter of 2022, the operating income was 254 million yuan, down 14.47% from the same period last year; the net profit returned to the mother was-1.4025 million yuan, down 105.17% from the same period last year; and the non-return net profit was-4.2406 million yuan, down 116.32% from the same period last year.

Guoyuan point of view:

The decline in birth rate led to a decline in income from baby products, and income from adult incontinence products increased steadily. 2022H1's revenue from adult incontinence products / baby care products / pet hygiene products / masks and other products was 2.49 trillion yuan respectively, compared with the same period last year, which was + 11.17%, 23.37%, 9.73% and 4, respectively.

24%, accounting for 43.28%, 47.03%, 7.67%, 2.03% of the main business income, respectively. The decline in overall income is mainly due to the decline in birth rate, the decline in income from 2022H1 baby products and the change in product structure. At the same time, due to the obvious slowdown in the growth rate of the country's total population, the market for adult incontinence products has great potential for development, and segment business income is expected to maintain steady growth.

The rising cost of raw materials leads to a decline in profit margins, and actively increases the profitability of brand promotion and channel development. 2022Q2's gross profit margin / net profit margin is 12.33% and 0.55% respectively, compared with 2021Q2-10.24%/-9.66pcts and 2022Q1 + 0.26/-1.16pcts, respectively, mainly due to the rising cost of raw materials. In terms of expense rate, 2022Q2's sales expense rate, management expense rate, R & D expense rate and financial expense rate are 10.84% 3.49% 5.40% 6.29%, respectively, compared with the same period last year + 4.51/+1.53/+1.05/-6.90pcts. The increase in sales expenses is mainly due to increased brand promotion and channel development, while the decline in financial expenses is mainly due to the increase in capital income and exchange gains and losses.

Has a rich brand product matrix, vigorously expand the business of adult incontinence products, the company has a series of well-known brands such as "reliable", "absorbing treasure", "safe nurse" and so on. From 2017 to 2021, the company and the "reliable" brand ranked first among domestic manufacturers and brands of adult incontinence products. In the future, the company will continue to innovate in product research and development, manufacturing and brand building, and further expand product categories. Maintain a competitive advantage. Among them, in recent years, the company has launched invisible water-absorbing towels and invisible walking pants, which are specially designed for Asian women, as well as professional men's water-absorbing towels for awakening mild incontinence groups. In the future, the company will focus on the market for adult incontinence products, expand sales scale and market share, and solve the adverse impact of declining birth rate on the company's operation.

Investment advice and profit Forecast

There is still much room for improvement in the penetration rate of adult incontinence products, and the company, as the industry leader, will benefit from the sales growth of its own brands dominated by adult care products. We estimate that the company's revenue from 2022 to 2024 will be 1.549 billion yuan, net profit 0.21 million, 0.95 million, 0.08, 0.33 and 0.56 yuan per share, respectively, and the corresponding PE will be times that of 151-35-21, taking into account the short-term pressure on performance and the uncertainty of the elimination time of external factors to maintain the "overweight" rating.

Risk hint

Market competition risk, baby birth rate decline risk, raw material price fluctuation risk, exchange rate risk.