Event
The Royal Group released its annual report of 2018 and its quarterly report of 2019.
The company achieved a total operating income of 2.336 billion yuan in 2018, a decrease of 1.30% over the same period last year, a net profit of-616 million yuan, a decrease of 1186.01% over the same period last year, and a non-return net profit of-631 million yuan, a decrease of 7683.04% over the same period last year.
In the first quarter of 2019, the company achieved an operating income of 467 million yuan, an increase of 4.04% over the same period last year; a net profit of 11 million yuan, an increase of 10.87% over the same period last year; and a net profit of 1 million yuan, a decrease of 76.89% over the same period last year.
Brief comment
The growth of dairy industry is steady, and asset impairment is a temporary drag on performance.
At present, the company's core business includes dairy industry, information business and film and TV drama production and distribution. From a business point of view:
The dairy business achieved an operating income of 1.361 billion yuan in 2018, an increase of 11.58 percent over the same period last year, accounting for 58.25 percent, with a gross profit margin of 30.32 percent, a decrease of 2.02pct over the same period last year.
In 2018, the operating income of the information services business reached 399 million yuan, an increase of 78.50 percent over the same period last year, accounting for 17.09 percent, with a gross profit margin of 28.48 percent, a decrease of 0.25pct over the same period last year.
The operating income of the film and television business reached 303 million yuan in 2018, down 59.56% from the same period last year, accounting for 12.96%, with a gross profit margin of 36.10%, a decrease of 8.11pct over the same period last year.
From a quarterly point of view, the operating income of 2018Q1/Q2/Q3/Q4 is 4.49, 5.51, and 615 million yuan respectively, with a year-on-year growth rate of-1.06%, 2.75%, 16.76%, 15.18%, respectively. The net profit of homing is 0.10 gamble, 0.82 and 0.28 million yuan, respectively, with a year-on-year growth rate of-42.90%, 213.27%, 18.59%, 914.43%.
During the reporting period, the company's performance declined rapidly, mainly due to the company's provision for impairment of goodwill, provision for bad debts of accounts receivable and other receivables, provision for impairment of fixed assets and provision for decline in inventory prices.
The production capacity, products and channels of the dairy industry have been promoted, and the business expansion in the information field has continued to promote.
In terms of dairy business, (1) South China Intelligent Dairy processing Plant was officially put into use, Youshi Intelligent Factory gradually released production capacity, Laisier factory capacity utilization increased significantly, and the foundation of the company's dairy industry was constantly consolidated. (2) the company further adjusts and optimizes its product structure, focusing on large categories and superior products, and better growth of buffalo milk and yogurt products. Naked yogurt, Aitenong series, Morafel full-fed yogurt, small yogurt series and other new products are deeply loved by consumers. (3) the company will strengthen channel sinking and marketing promotion, actively expand third-and fourth-tier cities and township markets, strengthen the competitiveness of e-commerce sales channels, and speed up the pace of multi-point layout of fresh houses and royal Xiaobai vending machines.
In terms of information business, there was a perfect online positive transformation in 2018, with digital Metro operators as the target, vigorously developing the sharing economy, steady development in intelligent informatization (information engineering, big data service, etc.), digital industry park and intelligent cloud customer service, with a year-on-year increase in revenue. At the same time, the company continued to promote business expansion in the field of information services, completed the equity acquisition of Zhi Wang Technology during the reporting period, and promoted the integration and optimization of research and development and service content between Zhi Wang Technology and perfect online.
Profitability declined slightly, and the expense rate was basically stable during the period.
During the reporting period, the company achieved a comprehensive gross profit margin of 27.93%, a decrease of 6.62pct over the same period last year, and a net profit margin of-25.60%, a decrease of 28.60pct over the same period last year. Reasonable management and control of expenses during the period. In 2018, the company's sales expense rate was 11.39%, a slight decrease of 0.14pct compared with the same period last year; the management expense rate was 6.46%, a slight decrease of 0.31pct; and the financial expense rate was 4.61%, an increase of 1.06pct over the same period last year.
2019Q1's gross profit margin was 27.95%, a year-on-year decrease of 0.38pct, and a net profit margin of 4.68%, an increase of 1.60pct over the same period last year. In terms of period expenses, 2019Q1's sales expense rate was 10.95%, an increase of 0.27pct over the same period last year; the management expense rate was 7.75%, a decrease of 0.47pct over the same period last year; and the financial expense rate was 5.40%, a decrease of 0.71pct over the same period last year. During the period of the company, the expense rate remained basically stable.
Investment suggestion: we expect the company's revenue from 2019 to 2020 to be 2.651 billion yuan and 3.032 billion yuan respectively, an increase of 13.95% and 14.36% respectively over the same period last year. From 2019 to 2020, the net profits returned to the parent company were 85 million yuan and 107 million yuan respectively, with year-on-year growth of 113.68% and 26.42% respectively, corresponding to 46.2x and 35.5x respectively, corresponding to PE of 46.2x and 35.5x.
Risk factors: rising film and television copyright fees; increased competition in the dairy industry; impairment of goodwill of subsidiaries in the cultural sector.