Incident Overview
On March 21, the company released its 2022 annual report: 2022 achieved revenue of 2,744 million yuan, +5.53% year on year, and net profit of the mother was 347 million yuan, +49.76% year on year. Excluding exchange gains and losses, net profit attributable to the mother grew 23.88% year over year.
Corresponding to 22Q4, the company achieved operating income of 750 million yuan, +7.34%% over the same period last year, and achieved net profit of 73 million yuan to the mother, +112.74% over the same period last year.
Analytical judgment
Revenue side: Export sales are steady, domestic sales are impressive. By region, the company's export revenue increased 3% year-on-year in '22, outperforming the industry against the backdrop of overall export pressure on household appliances; domestic sales achieved revenue of 397 million yuan, +13.65% year on year, accounting for 14.45% of total revenue, +1.03 pct over year. In terms of domestic sales, the company is actively developing new categories of new customers (Fangtai, Mijia, Shunzao, etc.). Among them, the Fangtai OEM floor washer V series has accumulated online sales exceeding 100 million yuan in 22 years. In terms of new categories, the company has obtained ISO13485 medical device quality management system certification, commercial beauty devices have already entered the mass production stage, and it is expected that they will gain strength in 23. Furthermore, the company took a stake in the new energy company Xihe Future to jointly develop new products and become its exclusive manufacturer. It has now officially begun production and manufacturing, which is expected to be released rapidly.
Performance side: Product structure optimization, RMB depreciation led to an increase in gross margin, and exchange earnings increased performance. Revenue from sweepers, motors, and corded vacuum cleaners with high gross margins in '22 was +301.74%, +23.43%, and +23.89%, respectively, driving the overall gross sales margin up 3.3pct to 20.1%. Since 22Q2, the RMB has depreciated at an accelerated pace, accounting for 84% of the company's export revenue. Settled in US dollars, exchange earnings reached 0.6 billion yuan. If exchange gains and losses are deducted, net profit attributable to the mother increased 23.88% year-on-year in '22.
Investment advice
The leading ODM of vacuum cleaners in China is deeply tied to JS Global Life. Against the backdrop of pressure on home appliance exports in '22, the company actively developed new categories of new customers, with impressive revenue and performance. Currently, the company is entering a booming circuit such as floor washers, beauty devices, and household energy storage, and is expected to continue to contribute incrementally.
We expect the company's revenue in 22-24 to be 30.47/34.74/4,291 billion yuan respectively, +11.02%/+14.01%/+23.54% year-on-year respectively. In terms of gross margin, considering the combined impact of factors such as product structure optimization, commodity price decline, exchange rate, etc., gross margin is expected to remain around 20% in 22-24. In terms of cost rates, considering that the company mainly focuses on ODM, it is expected that the various cost rates will be relatively stable. The corresponding net profit attributable to the mother in 22-24 was 3.49/396/463 million yuan, respectively, +0.54%/+13.53%/+16.95%, respectively. The corresponding EPS was 0.87/0.99/1.16 yuan respectively. Based on the closing price of 20.20 yuan on March 22, 23, the corresponding PE was 23.22/20.45/17.49 times, respectively. Comparable companies had an average PE of 15 times in 23 years. It was covered for the first time and gave it an “increase in holdings” rating.
Risk warning
Customer expansion falls short of expectations, recovery in overseas demand falls short of expectations, and there is a risk that raw material prices will rise.