2020 and 1Q21 results are in line with our expectations
The company announced its 2020 results: the annual income was 3.45 billion yuan, down 9.3% from the same period last year. The net profit returned to its mother was 180 million yuan, turning losses into profits, reaching the forecast limit. It lost 250 million yuan in the same period last year, deducting 75.7 million yuan in non-return net profit, and 330 million yuan in the same period last year. In line with our expectations, the company's profitability is mainly due to increasing efforts to reduce costs and increase efficiency in the second half of 2020, with remarkable results. At the same time, the company announced 1Q21 results: 1Q21 realized income of 490 million yuan, an increase of 152.4% over the same period last year, and a net profit loss of 220 million yuan, compared with a loss of 230 million yuan in the same period last year.
Development trend
1. The company will actively adjust its performance and turn its performance from deficit to profit in 2020. From a quarterly point of view, the growth rate of the company's 2020 Q1/Q2/Q3/Q4 net profit is-192% Maxime 171% Universe 145% Universe 439%. The gradual improvement of the company's performance is mainly due to: 1) the company has made great efforts to promote project progress and revenue carry-over in the third and fourth quarters of 2020; 2) the company has stepped up cost control, and the overall gross profit margin of the main business has increased. 3) the company continues to adjust and optimize the stores around the company, the operating expenses have decreased, and the operating efficiency has been significantly improved.
2. The gross profit margin is rising steadily, and we should pay attention to the subsequent recovery of profitability. In 2020, the company's gross profit margin was 36.3%, year-on-year + 1.9 ppt, mainly due to the quarterly recovery of the company's business and the effect of cost control, with the expense rate of 31.3%, year-on-year-3.4 ppt, of which the sales / management + R & D / financial expense rate was 18.1%, 13.2%, 0.2%, respectively, compared with the same period last year, and the net profit rate was 5.2%, which was + 11.8ppt compared with the same period last year. 1Q21 gross profit margin is 33.5%, year-on-year-0.7ppt, sales / management + R & D / financial expense rate is 49.4%, 26.4%, 0.9%, respectively, year-on-year is-47.1%, net profit is-45.1%.
3. "Product + Channel + supply chain" continues to upgrade to enhance customer experience. 1) strengthen product research and development and innovate user experience: on the one hand, the company creates regionalized products according to the characteristics of different regions, on the other hand, it combines deep supply chain products to develop whole products that meet the needs of the market. Joint master design joint products, bureau products, new products 2) actively expand the layout of online customer acquisition: the company upgrades and iterates the original main platform, and adds new social marketing channels (Meituan Dianping, Little Red Book, Douyin, etc.), while laying out the field of social e-commerce and opening up a new model of social marketing. we expect to be able to continuously enhance customer stickiness and enhance brand influence 3) Digital delivery to improve efficiency: the intelligent operation and management system of the whole chain of the company's home decoration business has been fully launched, which has opened the upstream and downstream business chain, service chain and data chain, and realized the digital delivery of the whole process. we expect that the system can greatly improve delivery efficiency and customer satisfaction.
Profit forecast and valuation
Taking into account the gradual recovery of the company's business, we raised our earnings forecast per share by 5% to 0.57 yuan in 2021 and introduced a profit forecast of 0.63 yuan per share in 2022. The current stock price corresponds to the 11 times of 2021 pedigree in 2022, maintaining the industry rating and maintaining the target price of 9.01 yuan. In 2021, there is 14 times higher than the current stock price, which has 35% upside compared to the current stock price.
Risk
Raw material prices fluctuated sharply, and real estate regulation exceeded expectations.