Events:
The company announced its quarterly report of 2018, with revenue of 473 million yuan, operating profit of 32.06 million yuan and net profit of 49.86 million yuan, which were 22.33%,-13.42% and 156.16% respectively compared with the same period last year, with earnings per share of 0.07 yuan. The forecast of the company's operating performance from January to June 2018: the net profit ranges from 3363 to 42.03 million yuan, ranging from 100% to 150%.
Comments:
1. The improvement of cigarette concentration promotes the growth of company revenue. In recent years, with the strengthening of national tobacco control, the growth rate of production and sales of China's tobacco industry has slowed down obviously. at the same time, in order to ensure the stability of tax growth in the cigarette industry, the upgrading trend of the industry structure is obvious. The sales scale of three or more middle and high-end cigarettes represented by "Furong King", "Yuxi" and "China" is as high as 34.0654 million cases, accounting for 68.9% of the total cigarette sales. The improvement of market concentration of cigarette companies puts forward higher requirements for the qualification and service of cigarette suppliers. The company's excellent packaging design capabilities (packaging materials, printing, anti-counterfeiting, beauty, etc.) increased the company's 18Q1 revenue by 22.33%. At the same time, 18Q1 received 32.46 million yuan for the distribution of bankruptcy property in Zhejiang Demi, of which 26.49 million yuan was included in the current non-operating income. 18Q1 generates an investment income of 9.74 million yuan from the disposal of available-for-sale financial assets.
2. Benefit from the bottoming out of the downstream tobacco industry, and the business boom of tobacco labels is expected to improve. In the past few years, domestic cigarette sales basically maintained at 4500-50 million cases. Affected by the large channel inventory in the previous China Tobacco system, domestic cigarette production dropped somewhat in 2016-2017. Affected by cigarette enterprises reducing costs and increasing efficiency, the company's 18Q1 gross profit margin continued to decline by 1 percentage point compared with 17Q4, but after 3 years of inventory digestion, we think that the pressure on cigarette enterprises has been greatly alleviated, and it is expected that the tobacco business boom is expected to improve. The company's main products vacuum aluminized paper and printing business 18 years of production and sales will pick up.
3. Actively explore the new model of agriculture. In June 2017, the company announced that it signed a "Cooperation Agreement on the use of Biotechnology to develop Organic Fertilizer and its Series products" with the Tonghe County Government, intending to invest 210 million yuan in the development of biotechnology R & D and production of bio-organic fertilizer and series product projects. it can improve the physical properties, nutrients, fertility and microbial activity of the soil. Among them, the fixed assets of the first phase are 160 million yuan and the investment of the second phase is 50 million yuan. According to the announcement, the first phase of the project will build an organic fertilizer plant with an annual output of 150000 tons and an organic soybean oil plant with an annual processing capacity of 50, 000 tons of soybeans. The second phase of the project includes 250000 tons of organic rice seedling nutrient soil, annual processing of 20, 000 tons of wood vinegar biological products and the use of biotechnology to produce environmentally friendly biodegradable rice seedling plates using straw as raw materials.
4. Maintain "prudent recommendation-A". The company has worked hard in the field of aluminized paper and cigarette label for many years, and has formed excellent R & D, design and manufacturing capabilities. The sales growth rate of medium-and high-grade cigarettes benefiting from structural upgrading has increased. The company is expected to develop new customers through bidding and increase market share. From 2018 to 2019, the EPS was 0.20,0.22 yuan respectively, and the corresponding 18-year PE and PB were 22,2.2 times respectively, maintaining the "prudent recommendation-A". Risk hints: the use of biotechnology to develop organic fertilizers and series of product projects is lower than expected.