Feike Electric (603868) Company Annual Report Comment: Performance is affected by channel adjustments and expected future improvement
Core points: 1.Incident Feike Electric released the 2018 annual report. In 2018, the company achieved operating income of 39.US $ 7.7 billion, an annual increase of 3.20%; net profit attributable to mother 8.45 ppm, an increase of ten years.14%; non-net profit attributable to mothers is deducted7.77 ppm, a decrease of 1 per year.27%; net operating cash flow 5.540,000 yuan, a decrease of 35 from 17 years.47%.  2.Our analysis and judgment (I) The company’s revenue growth is stable and the company’s total operating income in 2018 was 39.77 ppm, a 10-year increase3.20%, about 14 in 2017.55% of the maximum budget is mainly due to factors such as early truck shortages and channel adjustments.Razors and hair dryers are the company’s main revenue sources and growth drivers, accounting for 68% of the company’s operating income, respectively.8% and 15.38%, revenue increased by 10 in ten years.56% and 3.20%.Shaver sales were 6,576.30,000 pieces, an annual increase of 6.25%, the growth rate is higher than the growth rate of revenue, first of all for the company to strengthen the promotion of the sub-brand “Bo Rui”, “Bo Rui” grew faster.”Bo Rui” is a defensive sub-brand of “high quality and low price” launched by Feike, and achieved sales revenue in 20183.77 ppm, an increase of 50 in ten years.40%.The decrease in the company’s net operating cash flow was initially due to an increase in accounts receivable and bills.  In terms of quarters, the company’s operating income for Q1 / Q2 / Q3 / Q4 in 2018 was 8 respectively.85/9.31/10.03/11.5.7 billion, the previous growth rates were -5.93% / 19.04% / 6.66% /-2.74%, net profit attributable to mothers is 1.74/2.24/2.22/2.24 ppm, with annual growth rates of -12.99% / 25.33% / 0.74% /-4.78%.The company’s revenue and net profit increase in Q1 2018, Q4 changed to negative, of which Q1 has been out of stock due to shortage of trucks.  Due to the high market share of the company’s shavers and hair dryers, considering the company’s product positioning and high market holdings of shavers and hair dryers, the company has limited growth space in its main products.Relying on new products.In 2018, the company launched humidifiers and air purifiers. In Q1 of 2019, it introduced extension cord sockets and health scales. Electric toothbrushes and other products were also under development.Focusing on the market space transmission of the company’s launch of new products, we believe that the overall trend of the company’s future performance is stable and rising.  (II) The company’s profitability fluctuated slightly. The company’s gross profit margin in 2018 was 38.99%, a decrease of 0 every year.29pct, the initial gross profit tilt is the decrease in the market share of non-main products such as the company’s electric irons and hanging irons. The gross profit margin is 深圳桑拿网 affected by the fierce market competition.Its main products, electric shavers, have a large market share, high brand recognition, strong bargaining power, and stable gross profit margin. The gross profit margin of shavers in 2018 was 45.71%, an increase of 0 from 17 years.36 points.Except for the nose hair repair device, the gross profit margin of all other products has been accumulated, and the expansion range is up to 9.51PCT.  The company’s net sales margin in 2018 was 21.22%, a decline of 0 every year.78pct, in addition to the decline in gross profit margin, the increase in corporate expenses has also affected.In 2018, the company maintained its promotion in traditional media, and also advertised through emerging media such as the Internet.Due to increased publicity, the company’s selling expenses3.47 million, up 17.83%.Company management expenses1.05 ‰, an increase of 18 per year.75%, mainly due to the increase in wages and benefits, and the decrease in research and development expenses and financial costs due to reduced mold spending and increased interest income.  (3) Company channel adjustment and improvement of distribution system. In terms of offline channels, the company adjusted its channels in 2018, adjusting offline channels to KA terminals, regional distribution and provincial wholesale. Among them, Yiwu ‘s “national approval” was adjusted to”Provincial approval” to solve the serious problem of consignment.Through channel adjustment, the company’s offline distribution system is further improved, and the channel model will eventually land in the main model of prefecture-level city distributors, and the main model of county distributors, so as to achieve the coverage of supermarkets, electronics stores and other sales terminals.The company also established Feike’s offline experience store to explore a new retail model of online and offline integration.  In terms of online channels, the company will always strengthen its brand promotion on e-commerce platforms such as Taobao Tmall Mall, Jingdong Mall, Suning Tesco, Pinduoduo and other well-known e-commerce platforms. It will also strengthen cooperation with emerging e-commerce platforms such as Netease Koala and Global Catcher.To reach consumers from all directions.In 2018, the company’s electronic channels achieved operating income21.60 ppm, a ten-year increase of 7.16%, the growth rate exceeds the overall revenue growth rate.  (IV) In overseas markets, the proportion of private label business increased. The company’s overseas business increased the proportion of private brand sales.Overseas sales are mainly divided into two parts: private label sales and OEM products. While maintaining existing customers and distributors, the company gradually replaces OEM customers with brand distributors. The company’s own brand overseas sales are mainly cross-border.E-commerce is a breakthrough that penetrates from online to offline and expands overseas markets.The company’s overseas market strategy has achieved certain results. In 2018, the company’s overseas sales2.43 ppm, a 10-year increase3.10%.The proportion of brand overseas sales rose from 7% in 2017 to 60% at the end of 2018, surpassing OEM products for the first time.  (5) Ongoing cash dividends. The company has sufficient cash flow. According to the company’s disclosed dividend policy, it is proposed to distribute a cash dividend of RMB 15 for every 10 shares to all shareholders, a total of 6 cash dividends.534 trillion, the dividend rate is 77.33%, compared with a dividend payout ratio of 78 in 2017.A small decrease of 22%.The 2018 annual report shows the company’s monetary funds9.730,000 yuan, current assets 25.5.9 billion U.S. dollars after the completion of cash dividends will not affect the company’s normal operations.The decline in the company’s dividend payment rate was mainly due to the increase in the company’s net profit attributable to shareholders, which was an increase in operating income and net investment income.  3.Investment suggestion As a leading small appliance company, the company has a high market share in shavers and hair dryers, has strong bargaining power, and is expected to maintain steady growth in the future.In addition to stabilizing its main products, the company actively develops new products. The introduction of new products will promote the company’s revenue growth.After the adjustment of sales channels in 2018, its distribution system has been gradually improved, and it is expected that the performance in 2019 will improve with the introduction of new products.We predict that the company will achieve revenue of 45 in 2019/2020.99/49.4.6 billion, net profit 9.90/10.5.9 billion yuan, corresponding to an EPS of 2.27/2.48, corresponding to PE is 21/19 times, the first rating, given a “cautious recommendation” rating.  4.Risks suggest sluggish domestic sales, new product sales fall short of expectations, and changes in raw material prices.