2022-04-28 Tang Shuangshuang and Zhu Yuhao of West China Securities Co., Ltd. conducted research on Korrun shares and released a research report "90 points are expected to reduce losses, and new customer contributions are expected to be reflected in 23 years." This report gives a

2022-04-28 Tang Shuangshuang and Zhu Yuhao of West China Securities Co., Ltd. conducted research on Korrun shares and released a research report "90 points are expected to reduce losses, and new customer contributions are expected to be reflected in 23 years." This report gives a buy to Korrun shares. Rating, the current stock price is 13.99 yuan.

Korrun Shares (300577)

event overview

The company's revenue/net profit attributable to the parent company/net profit after non-attribution to the parent company in 2021 were 2.289/1.80/96 million yuan respectively, a year-on-year increase of 17.76%/131.03%/70.31%, in line with the forecast, income/ Net profit is still down 15%/20% compared with 2019. In 21Q4, the company's revenue/net profit attributable to the parent company/net profit after non-attributable to the parent company were 7.15/0.29/-027 million yuan respectively, a year-on-year increase of 52.29%/-29.07%/-185.39%, a year-on-year decrease of 4%/43%/- compared with 19Q4, Q4 The deduction of non-losses was mainly due to the decrease in gross profit margin, increase in sales expense ratio and investment losses. In 22Q1, the company's revenue/net profit attributable to the parent company/net profit after non-attributable to the parent company were 6.12/0.47/013 million yuan respectively, a year-on-year increase of 35.56%/2.78%/-40.63%. The net profit mainly came from government subsidies. A cash dividend of RMB 1.05 is distributed for every 10 shares.

analysis and judgment:

21 2B growth will accelerate in the second half of the year, and 22Q1 will grow rapidly based on a low base. In 2021, the company's 2B revenue will be 1.464 billion yuan, a year-on-year increase of 24%, an increase of 11% from 2019, and 2B will accelerate significantly in the second half of the year (2B revenue in the first and second half of the year will be 640/820 million yuan, respectively, a year-on-year increase of 3%/48%) . From the perspective of production capacity, the company's total production capacity in 2021 is 26.72 million pieces, a year-on-year increase of 27%. However, the production capacity utilization rate dropped by 2.29PCT year-on-year to 84.91% due to the commissioning of new production capacity (domestic/overseas production capacity accounted for 40%/60% respectively, Capacity utilization rates are 88.37%/82.58% respectively). In 22Q1, we estimate that 2B will grow by 40-50% based on a low base, and Indonesia will expand production at the end of March and double the original 120 lines.

2C has not yet recovered to the pre-epidemic level, with a high increase of 90 points, and the Xiaomi channel has declined sharply. 2C business revenue was 756 million yuan, a year-on-year increase of 3%, and a decrease of 41% from 2019. Among them, online (90-point brand)/distribution channel (Xiaomi channel) revenue was 347/409 million yuan respectively, a year-on-year increase of 63%/-21%, and an increase of 62%/-62% compared with 2019. We analyze the decline of Xiaomi channel, Mainly because Xiaomi has not launched overseas in 21 years and has taken the initiative to reduce low-priced SKUs in China. Looking at the first and second half of the year, the Xiaomi channel accelerated its decline in the second half of the year, with revenue in the first and second half of the year reaching 177/232 million yuan respectively, a year-on-year decrease of 16%/25%; 90% growth slowed down in the second half, with revenue in the first and second half of the year respectively. It was 155/192 million yuan, a year-on-year increase of 90%/47%. In 22Q1, we estimate that 2C will grow in single digits. The growth will mainly come from 90 Points’ overseas business, while Xiaomi and 90 Points’ domestic business will remain the same. The decline in

's gross profit margin was mainly affected by the decline in 2B and Xiaomi's gross profit margin. The gross profit margin in 22Q1 still declined year-on-year. The gross profit margin in 2021 will be 26.58%, a year-on-year decrease of 1.90 PCT and a decrease of 1.2 PCT from 2019. Broken down, the 2B/2C gross profit margin in 2021 will be 25.97%/28.28% respectively, a year-on-year increase of -3.24/0.44PCT. We analyze that the decline in 2B gross profit margin is mainly due to the impact of the epidemic in the first half of the year on capacity utilization, logistics, and exchange rates. Impact: The increase in 2C-end gross profit margin mainly comes from the 90-cent price increase and the increase in the proportion of new high-margin products. The gross profit margin in 22Q1 was 25.04%, a year-on-year decrease of 1.99PCT. The company's net profit margin in 21 was 7.54%, a year-on-year increase of 4.12PCT and a decrease of 1.25PCT compared with 2019. The year-on-year increase in net profit margin was mainly due to the improvement in expense ratio and the increase in other income and investment income. In 2021, the sales/management/R&D/financial expense ratios are 11.76%/10.18%/2.75%/1.35% respectively, a year-on-year increase of 0.65/-2.04/-0.99/0.07PCT. The year-on-year increase in financial expenses is 24% mainly due to the increase in interest expenses. .

Operating cash flow declined and inventories increased. The company's net cash flow generated from operating activities in 2021 was 47.43 million yuan, a year-on-year decrease of 65%. This was mainly due to the company's advance purchase and stocking in response to rising material prices and the disruption of overseas logistics due to the epidemic. The company's inventory is 533 million yuan, a year-on-year increase of 36%.

investment advice

Our analysis: (1) The 2B business is expected to maintain a growth rate of 20-30% in the future, and the company's new customers are expected to grow in volume in 2023; the 120 production lines in Indonesia's second phase are expected to ramp up in the second half of the year; (2) Loss reduction in 2C business is expected to be reflected in Q2. Taking into account the recurrence of the epidemic, the revenue for 2022/23 will be lowered from 3.24/4.087 billion yuan to 2.592/3.103 billion yuan, the new revenue for 2024 will be 3.69 billion yuan, and the net profit attributable to the parent company for 22/23 will be lowered from 342/450 million yuan to 2.01/272 million yuan, the new 24-year net profit attributable to the parent is 346 million yuan, corresponding to the 22/23 EPS reduction from 1.43/1.88 yuan to 0.84/1.13 yuan, the new 24-year EPS is 1.44 yuan, in April 2022 The closing price of 13.76 yuan on the 28th corresponds to PE of 16/12/10X respectively, maintaining a "buy" rating.

Risk reminder

Uncertainty in the development of the epidemic; fluctuations in raw material prices and rising labor costs; fluctuations in exchange rates; lower than expected production capacity expansion; systemic risks.

Securities Star Data Center calculates based on the research report data released in the past three years. The research team of Hao Shuai of Bank of China Securities has conducted more in-depth research on this stock. The average forecast accuracy in the past three years is 38%. It predicts that the attributable net profit in 2022 will be profitable. 358 million, and the predicted PE based on current price conversion is 8.53. The details of

's latest profit forecast are as follows:

A total of 7 institutions have rated this stock in the past 90 days, 6 with buy ratings and 1 with overweight ratings; the average target price of institutions in the past 90 days is 22.06. The Securities Star valuation analysis tool shows that Korrun (300577) has a good company rating of 3 stars, a good price rating of 3 stars, and a comprehensive valuation rating of 3 stars. (Rating range: 1 ~ 5 stars, the highest is 5 stars)

The above content is compiled by Securities Star based on public information. If you have any questions, please contact us.