Huangshi Group's revenue from Q1 to Q3 in 2016 was +52.2%, and net profit was +76.4%
Huangshi Group released its 2016 three-quarter report. Revenue from Q1 to Q3 was 1.59 billion yuan, up 52.2% year on year; net profit attributable to shareholders of listed companies was 133 million yuan, up 76.4% year on year; and achieved basic earnings per share of 0.1584 yuan. In the third quarter, the company's revenue was 490 million yuan, an increase of 30.8% over the previous year. The growth rate of the company's performance was in line with expectations. The high growth rate was mainly due to the expansion of the company's sales scale during the reporting period and the merger of Perfect Online and Shengshi Hot Sun.
The media sector also reported a sharp increase in performance. Net profit for the whole year is expected to increase by 50%-80%
In 2016, the company expects to achieve net profit of 277-332 million yuan for the whole year, an increase of 50%-80% over the previous year. Shengshi Jiaoyang is a subsidiary that merged in October last year. It confirmed close to half of its promised performance in this year's interim report, which led to a significant increase in the company's media business performance over the same period last year. Since Yujia Film and Television's performance was mainly confirmed in the second half of the year, the performance in the second half of the year boosted the growth rate of performance. Another subsidiary, Perfect Online, had a net profit of more than 10 million yuan in the first half of the year. The company controlled 60% of the shares. The parent company has already fully acquired it, and the second half of the year can be included in full performance. It is estimated that Perfect Reproduction's annual net profit will reach around 26 million yuan.
The merger led to a change in profit level. Net interest rate increased by 1 percentage point over the same period last year
During the reporting period, the company's comprehensive gross margin was 32.3%, the sales expenses ratio was 11.16%, down 2.38 percentage points from the previous year, and the management expenses ratio was 6.49%, down 0.5 percentage points from the previous year. The main reason for the decline in the same ratio of expenses is that the company's integration into new business units has caused changes in the company's overall profit level; however, we believe that as the share of the company's media business further increases, the sales expense ratio will continue to decline. The financial expenses ratio from Q1 to Q3 was 2.99%, up 1.06 percentage points from the previous year. This was mainly due to higher foreign investment in the early period and increased financial burdens. The company's net profit margin increased by 1 percentage point year-on-year to 10.23%.
Stable cash flow indicators
The company achieved cash flow inflows from operating activities of 99.75 million yuan, cash outflow from investment activities was 628 million yuan, and net cash flow from investment activities decreased by 306.92% year-on-year, mainly due to the increase in payments made by the company for Huangshi Group South China Dairy Co., Ltd. and Guangxi Huangshi Jiatianxia Food Co., Ltd. for production workshops, ranches, etc., and the fact that foreign-invested subsidiaries used more cash; cash flow inflows from financing activities amounted to 689 million yuan, mainly due to cash received from loans received by the company during the reporting period and interest-free loans from major shareholders.
The three-quarter report showed high performance growth, and the annual performance forecast was worry-free
In the future, Huangshi Group is positioned to become a supplier of a range of food, entertainment and educational products for children aged 3-7. The core of the media layout is IP content, and content is the core to bind consumers. Make full use of content resources to create channels and connect profit models such as advertising and derivatives. Rapid growth in performance is expected to continue in 2016. According to estimates, it is estimated that the company's EPS for 2016-2018 will be 0.47 yuan, 0.63 yuan, and 0.79 yuan respectively, corresponding to 37 times the 2016 PE valuation, maintaining the “increase in holdings” rating.
Risk warning: food safety issues, low media business performance expectations, etc.