A small increase in revenue and a sharp decline in net profit:
Affected by increased competition in the beverage industry, in the first half of 2013, the company's operating income was 397 million yuan, an increase of only 6.8 percent over the same period last year; operating costs were 304 million yuan, an increase of 11.29 percent over the same period last year, and gross profit margin fell 3.09 percent. The three expenses totaled 84.72 million yuan, an increase of 22.9% over the same period last year, of which sales expenses were 52.7 million yuan, an increase of 16.54% over the same period last year, due to increased market investment and increased salaries of sales staff, installation and after-sales service fees. The management fee was 28.647 million yuan, an increase of 22.34% over the same period last year, due to an increase in the salary of managers, housing rental fees and audit evaluation consulting fees, as well as an increase in management fees for subsidiaries Dayilong in North America and Baolong in Dongguan, and an increase in bank loan interest. the company's financial expenses for the first half of the year were 3.368 million yuan, a sharp increase of 1,054.94 percent over the same period last year.
Profit Forecast:
We expect the hot weather to drive the growth of the beverage industry downstream of the company, but the fierce competition leads to limited profit improvement, and the increase in three expenses will also erode the company's profits. In the second half of the year, the company's operating income increased slightly compared with the previous year, and the situation of net profit decline will not change. We lowered the company's 2013-2015 earnings forecast to 0.08 yuan, 0.09 yuan and 0.09 yuan, corresponding to the previous 5.52 yuan share price, the price-to-earnings ratio was 65.25 times, 63.45 times and 59.29 times, respectively, downgrading the company to "neutral".
Risk Tips:
1. The competition in the beverage industry has intensified.
2. The company's three expenses have increased significantly.
