I. Incident Overview
On August 15, the company released its 2021 semi-annual report. It achieved revenue of 317 million yuan during the reporting period, -1.15% year on year; achieved net profit of 11.61 million yuan, 30.08% year on year, and achieved net profit of 7.65 million yuan after deducting non-return mother's net profit of 7.65 million yuan, +1.01% year on year.
II. Analysis and Judgment
21H1's sales performance was stable, and the provincial market continued to improve. Judging from revenue and profit performance, 21H1 achieved revenue of 317 million yuan, -1.15% year on year; equivalent to 21Q2 revenue of 196 million yuan, -7.22% year on year. 21H1 achieved net profit of 11.61 million yuan, +30.08% year on year, and net profit of 7.65 million yuan after deducting non-return mother's net profit, +1.01% year on year, equivalent to 21Q2's net profit of 15.58 million yuan, equivalent to 21Q2's net profit of 15.58 million yuan, -2.66% year on year.
Looking at sales, 21H1 sold 112,300 kiloliters of beer, -3.8% compared to the previous year. The performance fell short of 21H1's growth rate of beer production by regulated enterprises nationwide (+10.23% compared to the same period), mainly due to the low production base effect of enterprises under national regulations. The company's 21H1 beer production increased by 2.9% compared to 19H1, while the production of enterprises under national regulations decreased by 0.3% compared to 19H1 during the same period, and the company's performance was still better than that of the industry. After the epidemic, the company strengthened the cultivation of the base market and focused on strengthening the construction and maintenance of catering channels. Its position in core markets such as Quanzhou, Ningde, Sanming and Jiangxi improved markedly, and its market share continued to grow. Looking at the tonnage price, 21H1 beer sold 2,779 yuan/kilolitre, up 2.7% from 20H1, and the trend of improving the product structure continued. Looking at sales regions, Fujian Province and outside the province achieved revenue of 243/71 million yuan respectively, +2.14%/-11.04%, respectively. The market within the province continued the continuous improvement trend since last year, but the market outside the province performed poorly.
Operational efficiency and profitability continued to improve slightly
(1) Gross profit margin: 21H1's gross margin is 28.97%, +0.95ppt compared to the previous year. It is expected to be mainly due to the scale effect brought about by increased production and improved sales structure. (2) Expense rate: The 21H1 company's expense ratio during the period was 14.75%, -0.07ppt compared to the previous year. The sales/management/R&D/financial expenses ratio was +0.87ppt/0.95ppt/1.05ppt/-2.93ppt, respectively. The overall three fees remained stable, gross sales spreads improved slightly, and the sharp decline in the financial expense ratio was due to an increase in interest income from deposit books. (3) Net interest rate: 21H1's net interest rate returned to the mother was 3.75%, +0.87ppt over the same period last year, the net profit of the mother was +30.08% compared to the same period last year, and net profit of the non-returned mother was +1.01% compared to the same period last year. The difference mainly comes from the increase in government subsidies in the current period compared to the same period last year.
III. Investment Suggestions
Revenue for 2021-2023 is expected to be 707/7.68/818 million yuan, +15.1%/+8.6%/+6.6% year on year; the return mother's net profit is 0.40/0.49/055 million yuan, +39.1%/+23.0%/+12.1% year on year, equivalent to 0.16/0.20/0.22 yuan, corresponding to PE of 57X/46X/41X. The company's valuation level is 52 times higher than PE in the beer sector in 2021 (wind's consistent expectations, arithmetic averaging method). We are optimistic that the company's future business conditions will continue to improve and maintain the “recommended” rating.
IV. Risk Reminder
Competition in the beer market in the province has intensified, promotion of high-end products has been blocked, food safety issues, etc.