The net profit performance of 21Q1 was better than revenue. We are optimistic about the boom in cross-border e-commerce. The buying company disclosed its 2020 annual report and 2021 quarterly report on April 22, achieving annual operating revenue of 5.52 billion yuan, an increase of 58.2% over the previous year; achieving net profit of 210 million yuan to the mother, an increase of 42.5% over the previous year, lower than our expectations (270 million yuan). The reason for the low expectations is mainly due to increased competition in 20Q4, increased company promotion efforts, and increased marketing investment. At the same time, the 21Q1 company achieved operating income of 1.31 billion yuan, an increase of 56.4% over the previous year; it achieved net profit of 3.688 million yuan, an increase of 328.4% over the previous year. The annual report proposes a dividend of 0.06 yuan per share. We are still optimistic that in the context of a boom in cross-border e-commerce exports, the company will achieve rapid growth in performance through a boutique strategy and light operating model. We expect the company's EPS to be 0.76, 0.95, and 1.11 yuan in 2021-2023, maintaining the “buy” rating.
The performance of the power supply category was weak in 2020, and the income of the small household appliances category increased
Looking at 2020 by category, the company's power sales performance was weak, with revenue falling 12.6%; sales performance in the small household appliances category was impressive, with revenue increasing by 192.2%; in addition, the company's newly developed categories (excluding power supplies, small appliances, and wireless audio) saw an 80.3% increase in revenue. The company continues to expand category boundaries. Sales of new categories, including mobile phones and computer peripherals, personal care and health care, and furniture, have all grown rapidly. We continue to be optimistic that new categories will continue to bring additional volume to the company's performance.
The increase in sales scale caused net operating cash flow in 2020 to be negative. 21Q1 showed a significant improvement in the company's net operating cash outflow of 150 million yuan in 2020, mainly due to the expansion of the company's sales scale and the increase in accounts receivable and inventory. At the same time, the rise in upstream purchasing prices at the end of the year also had a certain impact on the company's early payments.
At the end of 2020, the company's inventory reached 93 billion yuan, an increase of 50.4% over the previous year. As the company's revenue continued to grow rapidly in 21Q1, there was a marked improvement in operating cash flow, with a net inflow of 200 million yuan.
Cross-border e-commerce and consumer electronics have maintained a high boom, maintaining the “buy” rating considering that cross-border e-commerce competition barriers are low. Competition has continued to intensify since 20H2. We lowered the company's 2021-2022 profit forecast (lowering the gross profit margin of cross-border e-commerce, increasing the sales expense ratio) and adding a profit forecast for 2023. We expect the company's EPS for 2021-2023 to be 0.76, 0.95 (previous value 1.12, 1.47 yuan), and 1.11 yuan, respectively. Referring to Wind, the company's consistency forecast is 25.25xPE. Considering that there is still a certain gap between business scale and that independent R&D capabilities are relatively weak, profitability may be under pressure after increased competition, the company was given 20x PE in 2021, with a target price of 15.20 yuan (previous value of 26.88 yuan), maintaining the “buy” rating.
Risk warning: poor overseas consumption; risk of exchange rate fluctuations; risk of commission withdrawal from third party platforms.