Event: Tianyi Senmei released its mid-term results in 2016. during the reporting period (2015H2), revenue was 280 million yuan, + 42% year-on-year, and profit was 40.15 million yuan,-20% year-on-year.
Comments:
Tianyi Senmei NFC business is progressing smoothly, driving the company's overall revenue to grow significantly: 2015H2, the company achieved revenue of 279 million yuan, YoY+42%, compared to 2015H1 + 1.8% year-on-year. Among them, NFC juice achieved 66.87 million yuan of income (excluding tax), accounting for 24% of the company's income. At present, the monthly sales of NFC orange juice has reached 17 million yuan (including tax), and the cumulative number of points on shelves has reached 1885.
Excluding the impact of non-recurrent gains and losses and changes in the fair value of biological assets, the company's performance was + 22% year-on-year, in line with expectations: during the reporting period, the company's net profit decreased by 20% compared with the same period last year, mainly due to 16 million of the one-time redemption of convertible bonds in the same period last year. Excluding this factor, the reporting period increased by about 18% over the same period last year. Due to the decline in the market price of fresh oranges during the reporting period, the fair value of biological assets decreased by 5.14 million. After deducting this factor, the company's operating performance increased by 22% compared with the same period last year.
NFC business improves the company's overall gross profit level, but the sales expenses are high during the promotion period, while the management / financial expense rate has declined: during the reporting period, the company's gross profit increased by 69.4% year-on-year to 100 million, the highest in four years, and the gross profit margin increased by 6pct. Due to a large number of distribution costs arising from the promotion of NFC, internal sales fees increased by 1082% year-on-year in the reporting period, and the sales expense rate increased by 11pct. On the other hand, the rate of management and financial expenses decreased by 9pct compared with the same period last year.
Investment advice and rating: the company has become the leader of the domestic NFC juice industry, 16 years offline will speed up the channel shop (Beishan Guangshen target shelves 4000), online will comprehensively promote gift cards (launched in Fujian before the Spring Festival), the company's annual NFC orange juice sales are expected to exceed 200 million yuan. In August 15, we began to recommend the company's stock price of 0.96 yuan. After reaching the previous target price of 1.24 yuan, we promptly raised the target price and continued to recommend it, with a maximum increase of more than 50%. Affected by the previous decline in the Hong Kong stock market, the company's share price has been adjusted back, the current 16-year valuation of only 16 times, it is recommended that investors actively allocate. Maintain the previous profit forecast, the company's 16-18 revenue is expected to be 665 million, 888 million, 1.155 billion, YoY41%, 33%, 30%, net profit 104 million, 222 million, 347 million, YoY34%, 113%, 57% EPS0.08,0.16,0.25yuan, corresponding to PE16X/8X/5X, maintain the "overweight" rating, with a target price of HK $1.75.
Risk hint: marketing is lower than expected.