What happened: the company released its quarterly report for 19 years, and the income, net profit and non-return net profit were 1.19 billion, 142 million and 141 million respectively, which were + 13.98%, + 34.20% and + 33.60% respectively compared with the same period last year, slightly exceeding our expectations, mainly due to the decline in expense rate. The comments are as follows:
We estimate that 19Q1 OTC sales will maintain a growth rate of nearly 20 per cent. The market was worried that the company might reduce shipments in 19Q1 because of the reduction in VAT. From the financial report, the company's shipments were normal. We estimate that Renhe China will continue to maintain more than 20% year-on-year revenue growth, while Jiangxi Renhe Pharmaceutical Co., Ltd. will maintain 15-20% year-on-year revenue growth.
The profit growth rate is greater than the income growth rate as a result of cost control and the increase in the proportion of self-products. As Renhe has also stepped up its efforts to sell its own industrial products, the company's high gross margin has gradually increased its proportion of self-product income:
The gross profit margin of the 19Q1 consolidated statement increased by 0.67% compared with the same period last year, partly due to the increase in the proportion of high gross profit from product revenue. 19Q1 sales expense rate and management expense rate are-2.35% and-0.90% respectively compared with the same period last year. The effect of cost control is obvious, which is estimated to be related to the revenue increment assessment of the company.
The fluctuation of operating net cash flow is related to the business cycle, which we expect to improve in the future. The operating net cash flow of 19Q1 was 3.84 million yuan, compared with 17.15 million yuan in the same period last year. The company's 19Q1 received 985 million yuan in cash for the sale of goods and services, compared with 961 million yuan in the same period last year. We estimate that the less cash received by the company Q1 is related to the cycle of business development: the annual plan is made in January-February of each year, and the business personnel arrive after the New year, the company begins to deliver a large number of goods, the business is carried out one after another, and the Q2-Q3 payback becomes better. Generally, Q4 payment is the most because Q4 will assess the payback situation every year.
Set foot in the industrial hemp industry and diversify its business. On April 22, the company signed the Cooperation Framework Agreement on the demonstration Project of Industrial Hemp Comprehensive Utilization in Renheyuan with the Heilongjiang Qiqihar Municipal Government and Fengtai Fuqi.
The company and Fengtai Fuqi set up a joint venture with a total investment of 1.08 billion yuan, of which 108 million yuan was invested in the first phase. According to the framework agreement, the joint venture company will start the construction of an industrial marijuana planting demonstration base in May 2019, and has agreed with the municipal government that the arable land reserve will be no less than 20000 mu in 2020.
Maintain the "highly recommended-A" rating. We estimate that the growth rate of the company's homing net profit from 2019 to 2021 will be 26%, 20% and 17%, respectively, and the corresponding EPS will be 0.51 and 0.62, respectively. As a leading enterprise of OTC, the company has a rich variety and strong brand. After the formation of the ground push team, it ushered in the era of OTC terminal sales control, and sales are expected to maintain rapid growth; with the expansion of the proportion of product income, profitability is expected to be significantly improved.