With the rapid growth of cross-border e-commerce business income, the company is optimistic about the company's development strategy of "expanding products + expanding channels". In 2020, the company's income is 5.523 billion yuan (+ 58.19%), and the net profit is 212 million yuan (+ 42.53%). 2021Q1 realized income of 1.307 billion yuan (+ 56.43%) and net profit of 36 million yuan (+ 328.41%). With the promotion of core brands such as VAVA and the expansion of products such as smart home appliances, overseas market revenue is expected to continue to increase. By raising the profit forecast, it is estimated that the company's 2021-2023 net return profit will be RMB 629x871 million (the original value in 2021-2022 is RMB 396max 528 million). The current share price corresponds to EPS 1.28lb 2.47 yuan (the original value in 2021-2022 is 1.12max 1.49 yuan), and the current share price corresponds to 9.3CPG 6.74.8 times PE, maintaining the "buy" rating.
Smart small home appliances drive Zebao's income to rise, and overseas markets grow rapidly. In 2020, traditional precision manufacturing business income is 727 million yuan (+ 14.48%), and Zebao cross-border e-commerce business income is 4.773 billion yuan (+ 68.57%). In terms of products, the income of small household appliances is 1.796 billion yuan (+ 192.03%), accounting for 37.63% of business income; the income of computer peripheral products is 525 million yuan (+ 138.64%); private products are growing rapidly, with an income of 532 million yuan (+ 191.92%) in 2020, accounting for 13.93% of business income; and 364 million yuan (+ 205.88%) for personal health care products. From a regional point of view, the scale of the overseas market is growing significantly, and the company achieved export income of 5.083 billion yuan (+ 83.70%) in 2020.
With steady improvement in profitability, good operating indicators and more room for cash flow improvement, the company's product gross profit margin increased in 2020, driving the comprehensive gross profit margin of cross-border e-commerce business to 53.69% higher than in 2019. On the cost side, the company increases sales and R & D investment. The rate of sales / R & D / management / financial expenses has changed from the same period in 2019 + 3.63/+0.04/-1.07/+1.63pct to 36.66% to 36.66% to 1.68% to 2.65% to 2.13%.
In 2020, the net profit of the company's cross-border e-commerce business was 247 million yuan (+ 60.39%). The net profit of 2021Q1 reached 36 million yuan (+ 328.41%). We expect that with the deepening of the company's "product expansion + channel expansion" development strategy, the net interest rate of cross-border e-commerce business is expected to continue to grow, and precision manufacturing business will gradually return to stable development. The net cash flow of 2021Q1 rose to 20 million yuan from-80 million yuan in the same period in 2020. The company's payback capacity and inventory turnover capacity have been improved in 2020, and we believe that there is more room for cash flow improvement in the future.
Risk hints: changes in trade policy, changes in Amazon platform rules, slowdown in overseas growth, and so on.