Event: the company publishes its 2020 annual report. Achieve revenue of 3.218 billion yuan, + 0.24% year-on-year; realize net profit of 307 million yuan,-6.58%; and deduct non-return net profit of 253 million yuan,-7.27% year-on-year.
The key customer strategy continues to advance, industrial canals continue to grow, and retail sales are basically flat. From a regional point of view, domestic sales are recovering and growing, while export sales are under short-term pressure. Revenue from domestic operations increased by 3.93 per cent year-on-year, while revenue from overseas operations fell 10 per cent year-on-year due to the long-term impact of foreign outbreaks that began in mid-March. From a channel-by-channel point of view, the operating income of engineering / retail channels reached 8.20 billion yuan, an increase of 11.87% and 0.27% respectively over the same period last year. The company has newly expanded R & F, Poly, Cambridge, Olympic Park, Wanda, COSCO, Chuangchuang, Zhong Aang and other major real estate customers. at the same time, the company has launched the new infrastructure industry alliance of Huida Sanitary Ware, which currently has more than 600 participating institutions to provide protection for the company's sales project. Due to the great impact of the epidemic in the first half of the year, the retail side recovered relatively slowly. During the reporting period, the company upgraded its stores and opened up new stores, constantly improving its brand image and regional status.
The adjustment of income criteria resulted in a decline in gross profit margin and an increase in the rate of management, R & D and financial expenses. During the period, the company's gross profit margin decreased by 1.7 percentage points compared with the same period last year, mainly due to the implementation of the new revenue guidelines, the reclassification of freight and miscellaneous charges in sales expenses to operating costs, and the impact of freight adjustment on gross profit margin by 2.58 percentage points.
In terms of the rate of period expenses, the rate of sales expenses is 8.23%, year-on-year-1.2pct; the rate of management expenses is 6.79%, year-on-year + 0.77pct, mainly due to the increase in the number of executives in the company, which leads to an increase in the salary of employees; the salary of employees in the current period is 1.135 billion yuan, year-on-year + 13.84%; the financial expense rate is from 1.02%, year-on-year + 0.69pct, mainly due to the increase in exchange gains and losses of the company.
The operating cash flow improved significantly, the cash-to-cash ratio increased, and the cash-to-cash ratio decreased as a result of the increase in the payment of upstream bills. The net operating cash flow of the company during the period was 759 million yuan, a substantial improvement over the same period last year, mainly due to the increase in sales and the reduction of purchase cash due to the use of bills. During the period, the company's income-to-cash ratio was 84%, an increase of 9.2 pct over the same period last year; at the same time, the company's cash payment decreased significantly compared with the same period last year. At the end of the period, the total amount of accounts payable and bills payable by the company was 1.188 billion yuan, which was basically the same as that of the same period last year; in terms of payable, the amount of bills payable by the company was 435 million yuan, compared with 9 million yuan in the same period last year. At the end of the period, the asset-liability ratio of the company was 32%, which was higher than that of the same period last year. The balance of monetary funds and transactional financial assets was 1.495 billion yuan, with abundant funds on hand, which provided guarantee for the development of the company.
Investment suggestion: the company ploughs sanitary ware for more than 30 years, and the "Huida" brand has a high market awareness. After listing, we will speed up omni-channel marketing layout and production capacity construction, upgrade stores at the distribution end and actively sink channels to cover blank areas, the engineering side will focus on opening up major real estate customers, and production capacity will be actively invested to ensure scale expansion. at the same time, there is relatively sufficient space for capital and operating leverage. Intelligent and integrated sanitary ware open up new market space and help long-term development. We estimate that the return net profit of the company from 2021 to 2023 is 3.70,4.28,484 million yuan respectively, the corresponding EPS is 0.97,1.13,1.27 yuan respectively, the corresponding PE is 12,10,9 times respectively, and the "buy" rating is maintained.
Risk hints: real estate industry fluctuation risk, market competition risk, exchange rate risk, anti-dumping risk.