Forecast that net profit in 2020 will fall by 10.30% year on year, which is lower than our forecast. Revenue in 2020 will be 2.834 billion yuan to 3.88 billion yuan, down 20% to 10% compared with the same period last year. Net profit after deducting non-recurring profit and loss will be 194 million yuan to 166 million yuan, down 10% to 30% compared with the same period last year. Corresponding to 4Q20 income of 905 to 1.259 billion yuan, down 12% to 22% compared with the same period last year, and the net profit loss of home was 0.59 billion yuan to 0.33 billion yuan. The company reported a loss in 4Q20 net profit and the performance was lower than we expected, mainly due to the increase in the price of raw materials and the loss of goodwill impairment.
Pay attention to the main points
With the increase in the price of raw materials, the pressure at the cost end is greater: 1) Estelle's main products are cooking utensils, and the main raw materials are aluminum. Aluminum prices have risen significantly since July 2020, with 3Q20 and 4Q20 rising 11% and 14% respectively compared with the previous month. 2) the export business faces the pressure of RMB exchange rate appreciation. The cumulative appreciation of the 4Q20 RMB is 4%, and the cumulative appreciation for the whole year is 7%. 3) in terms of domestic sales, the company increases the promotion of its products, and the decline in average prices has a negative impact on gross profit margin. 4) in addition, the robot company acquired by Estelle did not perform well in 2020 and continued to lose money, and the company intends to make an impairment loss of 20 million yuan to 30 million yuan in goodwill.
Revenue-side recovery is slow: 1) 1Q20 Hubei subsidiary was heavily affected by the epidemic, resulting in a 46% year-on-year decline in revenue. Since then, the company's revenue-side recovery has been slow. 2Q/3Q20 revenue is-13% compared with the same period last year, and we expect 4Q20's revenue performance to improve month-on-month. 2) the slow recovery of the company's revenue is mainly due to the fact that the company's traditional advantage channels are mainly offline merchant supermarkets, while offline merchant supermarkets are greatly affected by the epidemic and are faced with online channel diversion, resulting in the failure of offline passenger flow to return to the level of the same period in 19 years. 3) in addition, the competition of e-commerce channel is fierce, the brand strength of the company is weak, and the operation ability needs to be improved. According to Amoy data monitoring, the online retail sales of Aixida in 2020 were + 21% compared with the same period last year, while those of competitors Supor cookware and Jiuyang cookware were + 31% and + 171%, respectively. The retail sales of Superior and Jiuyang online cooking utensils are 5.2 times and 2.0 times higher than that of Estelle.
In 2020, the channel structure of the sales cooker industry changed obviously, and the company's adjustment lagged behind, resulting in poor overall performance. The company has increased the layout of online channels, set up a new marketing department in 2020, and actively adopted new models such as live broadcasting. We believe that the company's performance is expected to improve in 2021.
Valuation and suggestion
Taking into account the increase in the price of raw materials and the loss of goodwill impairment in 2020, we downgrade the 2020 EPS forecast for 2021 by 19% to 0.29 yuan, and introduce the EPS forecast for 2022 to 0.40 yuan. We maintained our neutral rating and lowered our target price by 18% to 7.37 yuan due to the downgrade of our earnings forecast, corresponding to the 20x/18x 2021 22nd Pamp E, an increase of 7%.
The company's current share price corresponds to the 22-year 19x/17x 2021 pound E.
Risk.
The risk of market competition; the sharp rise in the price of raw materials; RMB exchange rate fluctuations.
