Incident: The company's performance in the first three quarters maintained steady growth, in line with expectations.
2020Q1-Q3 achieved revenue of 474 million yuan, +28.04% year on year; Guimu's net profit was 44.07 million yuan, +8.77% year on year; 2020Q3's revenue was 102 million yuan, -5.26% year on year; and Guimu's net profit was 6.27 million yuan, -181.05% year on year. The performance was in line with previous forecasts.
The company's performance continued to grow in the first three quarters, mainly due to the company's contribution of epidemic prevention materials (2020H1 accounted for 60% of the revenue from epidemic prevention materials); 2020Q3 demand and product prices declined in a single quarter due to the improvement of the domestic epidemic and the increase in domestic epidemic prevention material assets, so the company's revenue scale of epidemic prevention materials declined over 2020H1.
Looking at the main business, since the Q3 quarter is a low season for garment manufacturers, and the overseas epidemic has not yet been brought under control, the company's foreign clothing orders declined year-on-year, while overseas orders had a great impact on the company's profit side after demand declined due to high gross profit levels.
Gross margin has declined, the cost side is well controlled, and the impairment calculation after the scale of epidemic prevention materials increases affects the level of net interest rates.
The gross sales margin of the 2020Q1-Q3 company was 33.71% (-5.57pct), and the Q3 gross margin was 16.08%. The decline in gross margin was mainly due to the increase in unit cost after the company's revenue scale declined. At the same time, due to the gradual sufficient supply of epidemic prevention materials in the Q3 single quarter, the unit price of the product dropped significantly, which affected gross margin.
The cost side is well controlled, with the cost rate falling 5.93% during the first three quarters; Q3 fell 0.28% in a single quarter.
However, due to the increase in the scale of epidemic prevention materials, calculated impairment increased. Asset impairment losses reached 15.7 million yuan in the first three quarters, a sharp increase compared to the same period last year, thus affecting the overall level of net interest rates.
The net interest rate for 2020Q1-Q3 is 9.29% (-1.65pct), and Q3 is -6.16%.
The inventory scale increased. Q3 operating cash flow was affected by revenue scale from positive to negative in the first three quarters of 2020. The inventory scale in the first three quarters of 2020 was 103 million yuan, an increase of 44% compared to the beginning of the year, mainly due to increased stocking of epidemic prevention materials; the size of accounts receivable was 27.77 million yuan, down 34% from the beginning of the year; operating cash flow was 26.26 million yuan, with a net outflow of 9.11 million yuan in Q3 in a single quarter, mainly because Q3 was a low season for the garment manufacturing industry. The overseas epidemic affected demand side pressure and affected the overall revenue scale.
Short-term performance has been greatly affected by the epidemic, and I am optimistic about future long-term development
As a scarce target with large-scale personalized production capacity, the company uses the industrial Internet and big data to build a flexible supply chain that satisfies small batches and multiple batches. We believe that in the current industrial Internet context, traditional manufacturing uses front-end data to drive back-end R&D and intelligent production to improve supply chain responsiveness and efficiency. Cool Intelligence has strong technical advantages and scale advantages, and with its own experience in intelligent production and large-scale customized production, it exports overall factory upgrade plans and technical consulting services to other manufacturing enterprises to promote the upgrading and transformation of traditional manufacturing to intelligent manufacturing. Although the company's main business has been affected somewhat due to the pandemic in the short term, in the medium to long term, the company's C2M flexible supply chain still has competitive advantages and scarcity, and we continue to be optimistic about the company's long-term development.
Maintain a “buy” rating. Considering that the overseas epidemic is still having an impact on the company's order situation, we slightly lowered the company's profit forecast. The net profit forecast for 2020-2022 is 68.98 million, 86.84 million yuan, and 107 million yuan respectively (the original value was 91.17 million yuan/119 million yuan/155 million yuan), with year-on-year increases of 0.44%, 26% and 23%, respectively. The company's EPS is expected to be 0.29/0.36/0.45 yuan in 2020-2022, and the corresponding PE is 91.16, 72.41, and 58.84 times.
Risk warning: Risk of losing orders from major customers, the impact of the epidemic exceeding expectations and affecting the company's order situation, investment projects yielded benefits less quickly than expected, and terminal consumption was weak.
