Report guide
The company released its first quarterly report in 2019.
Main points of investment
The growth of the main business decreased slightly compared with the same period last year, and the growth rate of terminal mobile sales was still good. During the reporting period, the company realized operating income of 271 million yuan, down 7.56% from the same period last year, and its net profit was 57 million yuan, up 10.99% from the same period last year. The net profit after deducting non-return was 42 million yuan, down 17.86% from the same period last year, realizing EPS0.16 yuan, an increase of 6.67% over the same period last year. Although the company's revenue declined slightly from the same period last year, terminal growth remained stable, and we expect terminal growth to remain above 30% during the reporting period. The cash received from the sale of goods was 321 million yuan, the amount of bills receivable decreased by 171 million yuan, and the proportion of cash in the payback increased. After three years of rapid growth, the company will shift the focus of development to improve business quality, adjust the sales structure, digest channel inventory as the primary task of the current stage.
Channel sinking with the help of base drug catalogue adjustment
After preliminary research, the company found that grass-roots drugstores' acceptance of the company's products exceeded expectations, so in the first quarter, 80 new offices were arranged, focusing on the development of prefectural and county-level chains. At the same time, Dingkundan, the company's core product, has entered the new version of the catalogue in the past 18 years. At present, various places are also implementing it one after another, which also provides help for the company's expansion at the grass-roots level. During the reporting period, the company's accounts receivable increased by 110 million yuan, which we expect to be mainly caused by the first delivery of prefectural and county chains.
The sales model of health wine has taken shape and began to be popularized.
The company's development strategy of "catering as the core, Shang Chao, drugstores as the two wings" insists on focusing on the high-end healthy wine market, and has completed the channel layout in Shanxi, Zhejiang, Jiangsu, Guangdong, Fujian and other markets. quickly replicate the successful experience of the model market, closely integrate online and offline, carry out differentiated marketing around key areas and target consumers, and increase online cooperation with retail platforms such as Tmall, JD.com, etc. With the continuous accumulation of consumers, the company's sales of health wine reached 52.55 million yuan in 2018, an increase of 106.49% over the same period last year. The next 3-5 years is expected to become the outbreak period of the company's health wine business.
Profit forecast and valuation
We believe that the company's brand has a long history, excellent product quality, broad space in the industry, a clear development route, a good start, and maintaining high-speed growth after improving business quality is a high probability event. We predict that the company's operating income from 2019 to 2021 will be 2.234 billion yuan, 3.081 billion yuan and 4.357 billion yuan respectively, an increase of 38.01%, 37.94% and 41.39%, respectively, and the net profit attributed to the parent company will be 425 million yuan, 619 million yuan and 915 million yuan respectively, with year-on-year increases of 13.63%, 45.55% and 47.94%, respectively. The corresponding EPS is 1.20,1.75 and 2.59 yuan respectively, and the corresponding pre-PE is 25 times, 17 times and 11 times respectively.
Risk hint
The expansion of terminal sales is not smooth.
The progress of health wine promotion is not as expected.
The rate of sales expenses remains high.
