2021-10-27 Dongxing Securities Co., Ltd. Liu Tiantian, Chang Zijie and Shen Yilun conducted research on Jiuqi shares and issued a research report "orders continue to be full and profit margins remain excellent under multiple pressures". The current share price is 38.02 yuan.
Jiuqi shares (300994)
Event: the company's operating income in the first three quarters was 2.593 billion yuan, an increase of 86.41% over the same period last year, and its net profit was 147 million yuan, an increase of 54.35% over the same period last year. Of this total, the operating income in the third quarter was 1.014 billion yuan, an increase of 75.61% over the same period last year, and the net profit was 61.71 million yuan, up 75.47% over the same period last year. The net profit margin in the third quarter was 6.09%, maintaining an excellent level.
ODM business orders are full and delivery is relatively smooth, self-brand business to maintain the boom. From a product point of view, adult bicycles in the third quarter continued the high growth rate in the first half of the year, with an estimated growth rate of more than 130%, while power electric cars are expected to maintain more than 60% economic growth. From a sub-business model point of view, the company's ODM orders are full, which is the main reason for the high income growth, and the independent brand maintains the boom. The growth rate of order revenue in ODM business in the third quarter was more than 90 per cent, while the growth rate of independent brands was slightly lower than that of OEM, which was more obviously affected by shipping capacity. We believe that the demand for bicycles in Europe and America, the main markets of the company's ODM business, continues to be strong, while the poor supply chain under the epidemic strengthens the company's advantage in obtaining orders, and the company's ODM orders continue to be full. In terms of independent brands, the company's independent brands are mainly carried out in North America, and the capacity pressure in North America since this year is obviously greater than that in other regions, which limits the development of the company's own brand business in a short period of time. However, in the long run, the company's independent brand diversification channels expand smoothly, at the same time, with the mitigation of transport capacity, the growth rate of independent brand business is expected to increase.
Profit margin remains stable under multiple unfavorable factors, thanks to the company's strong response to the foreign trade situation and effective price transmission. The company's gross profit margin in the third quarter was 18.13%, down 2.95pct from a year earlier, but remained stable from a month earlier. The net interest rate in the third quarter was 6.09%, which remained basically stable compared with the same period last year and month-on-month, and the profit margin in the third quarter exceeded expectations. Shipping freight and raw material costs rose significantly in the third quarter, and the company almost did not bear freight under the ODM business model. At the same time, the company carried out price transmission smoothly by adjusting product prices and locking container prices. From the perspective of sub-business model, the profit margin of the company's own brand is lower than the normal level under the pressure of freight, but it is still better than the ODM contract manufacturing business, highlighting the advantages of its own brand business.
The company is full of orders on hand, and the annual results can be expected. Looking forward to the next two quarters, the company has good overseas demand and sufficient orders, and the relief of freight capacity and freight charges in Europe and the United States will also improve the delivery side of the company.
In the long run, the company's growth point is still its own brand and assist electric vehicle category.
1) diversification of independent brand business channels: the company has seized the opportunity of cross-border e-commerce and realized the development and rapid development of its own brand retail end business. at present, the company is diversifying its own brand channels. In addition to Amazon.Com Inc, an important channel, the company has developed more than a dozen platforms, including AliExpress, and self-built stations have begun to take shape, and online retail business has also led to offline distribution business. At present, the proportion of self-brand business is still low (less than 20%), the growth rate remains booming, and profits are expected to return to normal.
2) the penetration rate of power electric vehicles continues to improve: in Europe and the United States, power electric vehicles have both leisure use for outdoor sports and short-distance transportation tools, which has great potential for development. the company has seized the opportunity of channel and format accumulation in power electric vehicles, and is expected to fully enjoy the rapid release of categories.
Investment advice: raise the annual profit forecast based on the status of the company's on-hand orders. It is estimated that the company's net profit and profit score from 2021 to 2023 will be 2.26,3.17 and 425 million RMB, with a growth rate of 44.06%, 40.56% and 33.83%, respectively. At present, the stock price corresponds to 33.63,23.93,17.88 times of PE, respectively, maintaining the "recommended" rating.
Risk hint: the situation of international transportation is difficult to alleviate, overseas consumption is weak, and industry competition intensifies.
The stock has been rated by three agencies in the last 90 days, including two buy ratings and one overweight rating; the average institutional target price in the past 90 days is 51.8; according to the Securities Star valuation analysis tool, Jiuqi shares (300994) has a rating of 3.5 stars, a good price rating of 0.5 stars, and a comprehensive valuation rating of 2 stars.