The 2022 results are basically in line with our expectations, and the 1Q23 results are slightly lower than our expectations
Jieya Co., Ltd. announced 2022 results: revenue of 667 million yuan, -32.3% year-on-year; net profit of the return mother was 141 million yuan, -35.9%, which is basically in line with our expectations. On a quarterly basis, 1Q/2Q/3Q/4Q22 revenue was -47.9%/-36.1%/-11.6%/-17.1% year-on-year, while net profit was -42.2%/-24.3%/-17.1%/-65.5% year-over-year. At the same time, the company announced 1Q23 results: revenue of 128 million yuan, -29.2% year-on-year; net profit of Homo's net profit of 337 million yuan, -21.4% year-on-year, slightly lower than our expectations. Our expectations are mainly due to the year-on-year decline in the disinfectant wipes business.
Development trends
1. After excluding the impact of the disinfectant wipes business, revenue from the traditional main business increased 11% year-on-year in 2022. In 2022, the company's revenue fell 32.3% year on year, mainly due to the year-on-year decline in disinfectant wipes revenue. Revenue excluding the disinfectant wipes business increased 11.4% year on year; due to changes in product structure, the overall gross margin decreased by 1.4ppt year. By business, ① Wet wipes products: Revenue in 2022 was 589 million yuan, down 34.5% year on year, and gross margin decreased by 2.6ppt to 27.7% year on year. ② Face mask products:
Due to the decline in sales of high-priced hand and foot mask products, revenue from mask products in 2022 was -19.7% to 58 million yuan, and gross margin fell 2.6ppt to 53.3% year on year. ③ Toiletry products: In 2022, the company's 3,000 tons/year care products project was put into operation, achieving revenue of 2.185,000 yuan and gross profit margin of 39.6%.
2. Net interest rate fell slightly to 21.1% in 2022. The company's expense ratio in 2022 was 7.6%, up 0.2ppt year over year. Among them, the sales/management expense ratio was +0.4/+2.6ppt to 3.0%/5.3% year-on-year, respectively. The increase in the management expense ratio was mainly due to the increase in management remuneration and share payment expenses; the R&D expense rate/financial expense ratio decreased by 0.1/2.8ppt to 3.8%/-2.5%, respectively. The decrease in the financial expense ratio was mainly due to increased interest income and exchange income. In addition, non-operating expenses amounted to $110 million, mainly losses from the scrapping of fixed assets. Overall, the company's net interest rate in 2022 fell 1.2ppt to 21.1% year-on-year.
3. The leading manufacturer of wet wipes is moving towards the cosmetics business, creating a second growth curve. Looking ahead, we think: ① The wipes business: the company covers top quality customers at home and abroad, and we expect steady growth in the future through continuous product promotion (such as wet toilet paper, etc.); ② Cosmetics business: R&D, the company added the Shanghai R&D Center and the Dacheng Mountain Special Plant Planting and Extraction Project to initially form an integrated R&D and marketing layout of “one base, three centers”, which we believe is expected to lay the foundation for development; on the product side, the company and Chuangjian Healthcare set up a joint venture to lay out products such as collagen dressings. We think the product is expected to expand from “makeup brand” to “makeup” “Machine brand” and drive Increased added value. Follow the progress of new customer development.
Profit forecasting and valuation
Considering that some businesses are still in the market development period, we reduced net profit in 2023 by 12% to 161 million yuan, and introduced net profit of 185 million yuan in 2024. The current stock price corresponds to 18/15 times the price-earnings ratio for 2023/2024. Maintaining an outperforming industry rating, we lowered our target price by 9% to 41 yuan due to adjustments in profit forecasts, corresponding to 21/18 times the price-earnings ratio of 2023/2024, with 17% room to rise.
risks
There is a risk of fluctuations in raw material prices, capacity utilization falling short of expectations, and customer expansion progress falling short of expectations.