1H22 performance is in line with our expectations
The company announced 1H22 results: 1H22 revenue 3.153 billion yuan, year-on-year-20%; home net profit 13 million yuan, year-on-year-95%; net profit after deducting 16 million yuan,-92% year-on-year. Corresponding to 2Q22 income 1.57 billion yuan, year-on-year-16%; return to the mother net profit-14 million yuan, year-on-year loss; deduction of non-net profit 35 million yuan,-70% year-on-year. The company's performance is in line with the scope of the previous forecast and in line with our expectations.
Massage equipment has a strong optional attribute, and its business is affected by the global economic downturn. 1) 1H22's income from massage chairs and massage appliances was-15% and-10% respectively from the same period last year, which declined under the global shocks such as the conflict between Russia and Ukraine and inflationary pressure in the United States, while the revenue from the healthy environment business was-24% year-on-year, significantly falling from the high point of 1H21. 2) from a regional point of view, the company's domestic brand massage chair business performed well in 2021, but it is difficult to continue its growth under the impact of the epidemic this year. 1H22's domestic income is-22% to 685 million yuan compared with the same period last year. Jiuqian data show that 1H22's online sales have also declined compared with the same period last year. 3) 1H22's overseas income is-19% to 2.4 billion yuan compared with the same period last year, in which the performance of its own brand business is better than that of OEM. For example, the overseas revenue of the Ojiahua brand is relatively stable, with revenue in Malaysia and Singapore being + 18% and + 13% respectively compared with the same period last year; and the sales revenue of the North American COZZIA brand 1H22 is flat compared with the same period last year.
Financial analysis: 1) the company's 1H22 gross profit margin is 29.3%, of which 28.4% at home / abroad is 29.7%, year-on-year-7.3ppt/-1.3ppt, mainly affected by the high cost of raw materials. 2) the company's 1H22 sales expense rate / management expense rate / R & D expense rate respectively compared with the same period last year + 3.1ppt/+1.1ppt / + 0.7ppt, but the financial expenses benefited from the decline in exchange earnings, generally speaking, due to the decline in demand and the rigid impact of expenses, the company's 1H22 net interest rate was damaged; 3) the company's 1H22 realized operating cash inflow of 116 million yuan, which was significantly increased compared with the same period last year, mainly due to the optimization brought about by focusing on the core main business.
Trend of development
In the face of downward pressure on the global economy, we expect the company's revenue performance to remain under pressure in the second half of the year. But the profit side is expected to benefit from a significant reduction in raw material prices and an improvement in profit margins compared with the previous month.
Profit forecast and valuation
Considering the greater downward pressure on demand at home and abroad, we have lowered our profit forecasts for 2022 and 2023 by 20% to 265 million yuan / 466 million yuan. The current share price corresponds to a price-to-earnings ratio of 18.4 / 10.5 in 2023. Maintain the neutral rating and cut the target price by 18% to 7.56 yuan, corresponding to 18.4 times 2022 price-to-earnings ratio and 10.5 times 2023 price-to-earnings ratio, which is 2% lower than the current share price.
Risk.
The risk of market demand fluctuation; market competition aggravates the risk.