Event
According to the company's report released on the evening of the 28th, the company achieved an operating income of 850 million yuan, an increase of 130% over the same period last year; an operating profit of 129 million yuan, an increase of 283% over the same period last year; and a net profit of 109 million yuan belonging to shareholders of listed companies, an increase of 303% over the same period last year.
The significant increase in the company's performance was mainly due to the inclusion of Flag Intelligence in the company's consolidated statements since October 2016, as well as the steady growth in the company's resin lens-related business performance and the receipt of 20.8 million government subsidies.
Comment
From a business point of view, mail-order business has become the main source of gross profit. The revenue of the lens business in the first half of the year was 340 million yuan, an increase of 17.6 percent over the same period last year, with a gross profit of 98.22 million yuan and a gross profit margin of 29 percent, down 2 percentage points from 2016. The revenue of the merchandise mail order installment business was 420 million yuan, the gross profit was 280 million yuan, and the gross profit margin was 66 percent. An increase of 2 percentage points compared with the fourth quarter of last year. The merchandise mail order business accounts for 74% of the total gross profit.
Glasses business: research and development to drive products and market. Glasses 1.499 series, 1.60 series, garages and services, color film series products increased by 21%, 18%, 26% and 11% respectively compared with the same period last year. The company has successfully developed 1.56 anti-blue light discoloration lenses and double-sided progressive moulds, further optimized the production process of 1.499 "UV++" anti-blue light and 1.499 discoloration series products, and debugged the process of MR95UV++ lenses and MR8 (1.60) PLUS. On the other hand, the transformation of the company to a lens production service enterprise has achieved results, relying on Internet technology to transform the lens production service mode. The proportion of garage business in resin lens business has increased from 14% in the same period last year to 16% in this period.
The merchandise mail order installment business has increased steadily. The company 2017H1 has added two new large cooperative banking institutions, two new business workplaces, new self-owned warehouses, increased delivery rate and optimized consumer experience; in addition, the company has continuously increased investment in product variety development and quality assurance, and cooperated with suppliers to develop more than 20 pieces of high-end quality products designed, produced and sold independently, which have greatly enhanced the growth of mail-order business. The operating income of the bank card value-added service innovation service of the company is 440 million yuan, and the net profit belonging to the owner of the parent company is 90 million yuan; the net profit belonging to the owner of the parent company included in the merger scope is 78 million yuan. We have estimated the monthly revenue of the merchandise mail order business, and the monthly revenue in the first half of 2017 reached 70 million yuan, an increase of 3% over 2016Q1, but there is still some room for improvement compared with 89 million yuan for the whole of 2016.
Profit forecast and valuation: we predict that the company will achieve operating income of 2.174 billion, 2.95 billion, 3.587 billion and net profit of 320 million, 424 million and 519 million yuan in 17-19, and the corresponding PE in 2017 / 18 will be 30X/23X. Taking into account the company's overall high performance growth and broad market space, we maintain the "buy" rating.
Risk hint: the progress of new business development is lower than expected.
