Business structure optimization, high gross margin e-commerce agent operating business share increased, 19 years of performance in line with expectations, 20Q1 performance is eye-catching. In 19 years, the company achieved revenue of 10.507 billion yuan, down 2.24% from the same period last year, and its net profit was 192 million yuan, an increase of 49.71% over the same period last year. 201 million yuan was deducted from non-parent, an increase of 14.55% over the same period last year. The company's 20Q1 achieved revenue of 2.15 billion yuan, an increase of 0.52% over the same period last year, a net profit of 13 million yuan, an increase of 3231.06%, and a net profit of 14 million yuan, an increase of 826.25% over the same period last year. The impact of the superimposed epidemic in the off-season is still eye-catching, mainly due to the increase in gross profit margin caused by the optimization of business structure. The company intends to pay a cash dividend of 2.5 yuan (including tax) to all shareholders for every 10 shares, with a dividend yield of 1.10%.

From a business point of view, the company's 19-year brand marketing business achieved income of 10.157 billion yuan, an increase of 0.47% over the same period last year, accounting for 96.67% of the operating income, which is the company's main business, mainly due to the increase in the scale of brand customer cooperation, such as cosmetics, daily chemical, 3C digital and so on. Over the past 19 years, the company achieved 306 million yuan in revenue from the brand agent business, down 33.11% from the same period last year, accounting for 2.91% of the operating income, mainly due to the company's initiative to reduce the scale of the original buyout sales agent (mainly distribution) business and adjust the original e-commerce business model.

The company's profitability is expected to continue to increase with the proportion of operating business from generation to generation. The company's overall gross profit margin for 19 years was 11.72%, an increase of 0.18pct over the same period last year, including a gross profit margin of 11.75% for brand marketing business, a decrease of 0.15pct over the same period last year, and a gross profit margin of 11.88% for brand agent operation, an increase of 4.47% for 20Q1 gross profit margin and an increase of 0.54pct over the same period last year. The company's 19-year net interest rate was 1.85%, an increase of 0.77% over the same period last year. The net interest rate of 20Q1 was 0.50%, a year-on-year increase of 0.44pct. In 1919, the company's four-item expense rate was 9%, an increase of 1.02 pctbot 20Q1 by 10.70%, and an increase of 0.16pct over the same period last year.

In 19 years, the company has effectively adjusted the original e-commerce business model, and the company will make every effort to promote the full-chain operation and service model with high added value in 20 years. In 1919, the company cooperated with the Korean OOZOO mask brand and the Japanese recolte small household appliance brand introduced by the company's overseas office, and the advantages of both sides complement each other. The company provides marketing services such as brand creative planning, packaging design, marketing planning, new channel sales and online official direct store operation. Brands provide warehousing, logistics and after-sales services, work together to create online sales channels, and rapidly increase the scale of related business by combining hot spots such as online celebrity marketing and content marketing. finally, the sales revenue realized by this model is 32.17 million yuan for the whole year, an increase of 88.7% over the same period last year. The business revenue under the distribution mode shrank to 273 million yuan, down 37.83% from the same period last year. In March 20, the company successfully landed the interest card of a joint venture snack food brand (omni-channel operation), and will focus on creating online sales channels, including traditional e-commerce channels such as JD.com and Tmall and new e-commerce channels such as Douyin, Kuaishou Technology, Bilibili Inc. and Xiao Hongshu. In the future, more brands will land on behalf of operating projects, bringing new performance increments.

Investment point of view: the overall operation of the company in the first quarter is less affected by the epidemic, showing a strong toughness. In the past 20 years, the layout of the company's brand operation and online sales channels will usher in dividends. Accordingly, we raised the company's previous profit forecast of 287 million yuan for 2020-2021, and we expected the net profit for 2020-2021 to be 280,000,000 yuan respectively, corresponding to the valuation of 20x/13x, with a corresponding growth rate of 45.9% and 48.6% respectively. The company's previous announcements such as executive holdings and fixed increases show long-term confidence, focus on the company's e-commerce business and financing progress in the future, and maintain a "buy" rating.

Risk hints: the macroeconomic boom is not as expected, the competition in the marketing industry is intensified, the loss of bad debts is increased, and the effect of R & D investment is not as good as expected.