Overview of events
According to the company's mid-2022 report, the revenue / return net profit / deduction of non-return net profit of 2022H1 company is RMB 385 million respectively, compared with the same period last year-45.58% Universe 200.43% Universe 200.75%. The income / return net profit / deduction of non-return net profit of 22Q2 company is RMB 589 million respectively, compared with the same period last year, which is-54.06%, 252.09% and 253.38% respectively. In the first half of the year, South China, Shanghai, Beijing and other areas with relatively large business operations were successively affected by the epidemic to varying degrees, which had a great impact on the company's normal business activities, such as business signing, logistics, project site progress, and so on, and the performance was lower than expected. In terms of cash flow, the net cash flow generated by 2022H1's operating activities was-121 million yuan, compared with the same period last year, which was mainly due to the decrease in cash received by the company in selling goods and providing labor services.
Analysis and judgment:
Revenue side: 22H1 revenue is declining compared with the same period last year, and digital strategy is steadily advancing. From a sub-industry point of view, 22H1's income from home decoration, Seiko, public wear, franchise, sales, transportation and other business is 8.24,0.30,0.63,0.03,0.06,0.01 and 36 million yuan respectively, accounting for 85.56%, 3.06%, 6.57%, 0.29%, 0.63%, 0.13% and 3.76% respectively. Year-on-year respectively-47.33%,-40.78%,-39.32%,-18.12%,-44.12%,-35.49%, + 3.25%, all industries are affected to varying degrees. In the first half of the year, the company continued to innovate and upgrade, independent research and development of a number of technologies were identified, improved the wall and floor structure, drainage pipes, display cabinets and other construction technology, solved the residential electrical safety risks and basement environment damp mildew and other pain points. In terms of product research and development, we independently designed and developed more than 200 sets of online lifestyle, and presented the case product application portfolio in Xingyao sales APP to achieve efficient communication between sales staff and customers online and offline; in terms of matching products, we continue to expand supply chain channels, with a total of 5233 SKU of 18 major products being sold in the vertical supply chain and 10053 SKU of regional supply chain online to ensure product richness and price advantage. The digital home decoration business has been accelerated to land all over the country, and the company has vigorously promoted the online application of Starlight system and Tianyan system in various branches of the country. The digital installation business SAAS system has realized the digital delivery of the whole process and has covered all the digital loading business storefronts. The overall on-time delivery rate of 22H1 digital loading business has reached more than 95% (excluding the influence of epidemic factors and changing construction period), and customer satisfaction has reached more than 9.6 points. The original business has achieved the demarcation of agreements, contracts, and receiving materials through the SkyEye system, and many branches have been launched one after another, and the efficiency of interaction with customers has been further improved. The overall on-time delivery rate of 22H1 has reached more than 90% (excluding the impact of epidemic factors), and customer satisfaction has reached more than 9.45 points.
Profit end: profitability is under pressure and expenses increase year-on-year.
2022H1's gross profit margin was 25.96%, down 2.90% from the same period last year. Q2 single-quarter gross profit margin was 21.59%, down 5.50pct from the same period last year, and 11.24pct from the previous year. In terms of industry, the gross profit margin of home improvement in the company's main industries was 22.21%, down 4.73% compared with the same period last year; in terms of products, the gross profit margin of the engineering / design business, which accounted for 21.00% of the larger engineering / design business, was 36.66%, down 5.47% from the same period last year; and from a regional point of view, the gross profit margin of the company's main sales regions, North / East China, was 38.92% and 21.71%, an increase of 2.26/-3.92pct over the same period last year. 2022H1 net profit rate is-41.29%, down 34.54pct from the same period last year. The decline in net profit rate is mainly due to the decrease of gross profit margin and the increase of period expense rate; 2022H1's period expense rate is 80.11%, year-on-year + 44.44pct Among them, the sales / management / R & D / financial expense rate is 51.91%, 19.89%, 6.85%, 1.46%, respectively, an increase of 31.26/9.74/2.55/0.89pct over the same period last year. The increase in sales expense rate is mainly due to the increase in advertising expenses and employee compensation.
Investment advice:
With the stable epidemic situation and the growth of the completed area of real estate, the demand for home decoration will gradually increase, the company will have sufficient orders on hand, and introduce XIAOMI technology to expand digital decoration and smart home and other areas to support performance growth. However, taking into account the greater impact of multiple outbreaks on the company in the first half of the year and the fact that the company's digital loading business is still in the investment period, we lowered our previous profit forecast from 47.49,54.23 and 6.244 billion yuan to 29.02,39.57 and 4.256 billion yuan respectively in 22-24, and EPS from 0.32,0.37,0.47 yuan in 22-24 to-0.51,0.22,0.30 yuan respectively. Corresponding to the closing price of 6.03 yuan per share on September 5, 2022, the corresponding PE for 23 and 24 years is 33 times and 23 times respectively, continuing to maintain the "buy" rating.
Risk Tips:
1) the market competition aggravates the risk; 2) the development of new business is not as expected.