Event: Guanghong Holdings released its 2017 semi-annual report on August 31. During the reporting period, the company's operating income was 1,046 million yuan, up 0.53% over the same period last year; operating profit was 74.1543 million yuan, up 27.43% over the same period last year; non-net profit deducted from its mother was 53.0063 million yuan, up 18.78% over the same period last year; basic earnings per share were 0.09 yuan.
The operating condition is healthy and the profit level remains stable. During the reporting period, revenue increased by 0.53% compared with the same period last year, while operating costs increased slightly to 897 million yuan, up 1.16% from the same period last year. Sales expenses and management expenses were 4243.46 / 52.2002 million yuan respectively, an increase of 7.09% and 8.99% respectively over the same period last year, and the cost level increased slightly. In terms of specific business, during the reporting period, the revenue of the educational books business was 513 million yuan, down 5.78% from the same period last year, while the gross profit margin increased slightly to 18.64%, an increase of 2.32% over the same period last year. The revenue of the food business was 532 million yuan, up 7.48% from the same period last year, while the gross profit margin decreased slightly to 9.99%, down 3.07% from the same period last year. The fluctuation range of the business is low, and the overall situation remains stable.
The upstream and downstream chains of educational publishing business are perfect, the customers are stable, and the profitability will continue. Educational publishing and distribution business is mainly to provide primary and secondary schools, children's teaching materials and teaching assistance, using chain network management model. Due to the high qualification requirements for the distribution of free teaching materials in primary and secondary schools, the company, as one of the two channels for the distribution of free teaching materials in primary and secondary schools in Guangdong Province, has a certain industry influence. At present, the education distribution section is facing the challenges of textbook distribution qualification declaration, free textbook recycling, pre-class arrival and other challenges, but the performance has not been significantly affected during the reporting period. The main reasons are: the company has a stable upstream and downstream customer source, better service and comprehensive network layout. "Educational Bookstore" has high popularity and regional brand advantage in Guangdong educational circles. The chain network management model has been gradually improved, and the distribution outlets in the province have effectively expanded the book market at the county and district level, and better stabilized the distribution business of free teaching materials. In the long run, the profitability of the educational publishing business will continue.
The meat business is more vulnerable to market fluctuations and is in good condition at present. Meat business includes cold storage business, frozen products market business, frozen products trade and so on. At present, the company is in a leading position in the meat industry in South China, has won several honors, and the revenue scale is guaranteed. Because it is in the stage of full competition in the market, the profit level is maintained in a reasonable range. After experiencing a continuous rise in pig prices last year, pig prices have risen and fallen this year, and the production and marketing business of chicken seedlings has been impacted by H7N9, and market fluctuations have had an impact on business conditions. In order to cope with the fluctuations, the company optimized the product structure and increased the trade of frozen goods in the business model during the reporting period, so that the profitability of "cold storage + market" was further consolidated and improved, and the management quality was significantly improved.
Profit forecast and risk rating: during the reporting period, the company's business indicators remained healthy and increased slightly. In the face of the risks of various industries, the company maintains the stability of the educational publishing industry by increasing the network to expand the county market, and maintains the stability of the food industry through the mode of scientific and technological innovation and quality control. The high-risk and low-benefit business has been effectively controlled, and the management capacity is good under the dual-main business model. It is estimated that the company's EPS in 17-19 will be 0.21, 0.23, 0.27, respectively, corresponding to the current share price PE of 42-38-33, the first time to cover the "overweight" rating.
Risk tips: market price fluctuations in the food sector, free textbook circulation is not as expected
