Core viewpoints
Event: according to the company's quarterly report for 2022, Q1-3 realized revenue of 3.942 billion yuan, year-on-year + 8.0%, net profit of 585 million yuan, year-on-year-28.32%; revenue of Q3 alone was 1.298 billion yuan, + 7.94% over the same period last year, realizing net profit of 86 million yuan,-72.34%.
Income growth is steady and profitability is under short-term pressure. Q3 revenue increased by 7.94% compared with the same period last year, with a month-on-month growth rate of + 6.91 pctline H1 affected by the epidemic. Q3 is expected to improve in eastern China due to the epidemic, and Q3 is expected to continue to increase in the new tobacco business (H1N1 297.53%). The company's Q3 gross profit margin is 21.73% (- 10.72pct) and Q1-3 gross profit margin is 28.59% (- 5.0pct), which is mainly due to the adjustment of the company's product structure and the increase in raw material costs. On the expense side, the expense rate during the Q1-3 period is 13.38% (+ 2.0pct), of which the management expense rate is from + 1.8pct to 7.6%, mainly due to the high increase in equity incentive fees compared with the same period last year.
Cigarette label and color box business: according to the data of the National Bureau of Statistics, the cumulative production of 2022Q1-3 cigarettes in China is 1.97 trillion, + 1.8% compared with the same period last year. The company's tobacco label business is affected by intensified market competition and epidemic and other factors. Short-term revenue declined. The growth rate of color box business has slowed down under the weak downstream consumer demand. After entering the wine bag market, the company continues to expand FMCG packaging and actively cultivate subdivided track products. With the recovery of downstream consumer demand, the growth rate of color box business is expected to pick up. New tobacco business: the company is stuck in every link of the new tobacco industry chain, with layouts for upstream consumables, mid-stream contract manufacturing, downstream brands and channel trade. at present, subordinate subsidiaries Yunshuo Technology and Yunpu Xinghe have been granted e-cigarette oil and OEM licenses, and it is expected that the brand license will be landed in the near future. E-cigarette tax policy has been launched recently, compliance has been further strengthened, and the company is expected to open the second growth pole with its first-mover advantage and comprehensive card position advantage.
Investment suggestion: as the leader of cigarette packaging, the cigarette label business is the basic plate, steadily promote the upgrading and development of large packaging business, and the new tobacco business is expected to continue to grow in all aspects of the overall clamping industry chain. It is estimated that the net profit of homing from 2022 to 2024 is 9.5,10.4 and 1.09 billion yuan respectively, corresponding to PE11.1, 10.1 and 9.7 times.
Risk tips: the regulation of the new tobacco industry is higher than expected; market competition intensifies; terminal demand is lower than expected; goodwill is high, there is a large impairment risk.