Centennial brand exhibitors speed up, maintain high dividends, and maintain the "buy" rating company to release its 2020 annual report and quarterly report for 2021 on April 26. 1) in 2020, the revenue was 51.72 billion yuan (+ 4.2%yoy) and the net profit was 1.59 billion yuan (+ 12.6%yoy), which exceeded our previous expectations (1.48 billion yuan). It was mainly due to the significant acceleration of the company's exhibition stores. 557 new stores were opened in 2020, an increase of 49.7%, which promoted the steady development of the company's main gold jewelry industry. 2) 21Q1 realized revenue of 17.2 billion yuan (+ 18.7%yoy) and net profit of 650 million yuan (+ 74.5%yoy). The company's annual report announced that it plans to distribute 12.5 yuan (including tax) for every 10 shares, with a dividend rate of 41.2%. The gold jewelry industry continues to be booming, and the company, as a century-old brand, is expected to benefit from channel expansion. We estimate that the company's return net profit from 2021 to 2023 will be 17.7,19.8 and 2.19 billion yuan respectively, with a target price of 70.98 yuan, maintaining a "buy" rating.
The speed up of the exhibition shop will promote the steady development of the company's gold and jewelry business.
In 2020, the company opened 557 new stores, including a net decrease of 4 self-operated silver buildings and a net increase of 561 chain stores. It is significantly faster than that in 2018 and 2019 (a net increase of 347,372). The overall development of gold jewelry business is steady and its profitability is stable. In 2020, the jewelry business realized revenue of 38.08 billion yuan (+ 2.6%yoy) and gross profit margin of 10.14% (- 0.14pct yoy); gold trading business realized revenue of 13.02 billion yuan (+ 19.9%yoy) and gross profit margin of 1.26% (+ 0.07pct).
The effect of fee control is good, and the profitability is significantly improved.
In 2020, the company's sales expense rate, management and R & D expense rate were 1.33% and 0.86% respectively, compared with the same period of-0.17pct and-0.17pctscape 21Q1, the sales expense rate, management and R & D expense rate were 1.60% and 0.69% respectively, year-on-year-0.34pct and + 0.01pct. The significant decline in the rate of sales expenses is mainly due to the reduction of advertising expenses and rental expenses of the company. In 2020, 21Q1's gross profit margin was 8.18% and 7.64% respectively, compared with-0.29pct and-0.53pct, respectively, but due to proper fee control, the net profit of returning home reached 3.07% and 3.77% respectively, compared with + 0.23pct and + 1.20pct.
Gold jewelry continues to be high, helping to boost the leading net profit elasticity, maintaining the "buy" rating of the gold jewelry industry to maintain a high boom, with the release of wedding demand, the company continues to penetrate through the rapid channel through the joining model, the company's net profit is expected to continue to maintain rapid growth. We estimate that the company's revenue from 2021 to 2023 will reach 575.7, 628.3 and 67.18 billion yuan, with a net profit of 17.7 yuan, 19.8 yuan and 2.19 billion yuan (17.4 yuan and 1.93 billion yuan before 2021-2022, slightly upward mainly due to 2020 exhibition stores exceeding expectations). Reference Wind comparable company 2021 consistency forecast 19.08x PE, taking into account Lao Fengxiang as a century-old brand, brand strength is stronger, is expected to more fully benefit from the high prosperity of the industry, give the company 2021 21x PE, target price of 70.98 yuan (the previous value of 70.75 yuan), maintain the "buy" rating.
Risk tips: macroeconomic recession; wedding demand release is lower than expected; gold price fluctuates sharply