This report is read as follows:
Affected by the epidemic, the customer expansion of dry powder overseas market is weaker than expected, easy to open cans benefit from the transfer of global orders to China and consumption upgrading, product structure continues to optimize, profitability continues to improve, internal repair and external expansion accelerate industry integration.
Main points of investment:
Lower the target price to 21.55 yuan to maintain the overweight rating. The company released the mid-2020 report, the results are in line with expectations, but considering that the global epidemic will have a certain adverse impact on overseas market expansion, the company reduced its EPS to 0.52 (- 0.11) / 0.70 (- 0.10) / 0.96 (- 0.03) yuan in 202022. In the long run, the company continues to improve the competitiveness of its products and has a strong ability to obtain orders. with reference to the industry, it gives a valuation premium of about 30 times PE in 2021, lowering the target price to 21.55 yuan and maintaining an overweight rating.
The performance is basically in line with expectations, the product structure continues to be optimized, and the profitability continues to improve. The company's 2020H1 realized revenue of 521 million yuan (- 5.64%) and net profit of 47 million yuan (+ 8.29%). Among them, Q2 single-quarter revenue and net profit increased by 16.31% and 47.83% respectively, benefiting from the increase in the proportion of high gross margin products, gross profit margin and net profit margin increased to 24.71% and 9.54%, respectively.
Affected by the epidemic, the expansion of customers in the overseas market of dry powder is weaker than expected, and the gross profit margin of cans easy to open has increased significantly. The company's dry powder easy-to-open cover revenue also fell by 22.83%, and the global economy was affected by the epidemic. Milk powder enterprises certified suppliers, resulting in lower-than-expected progress in customer development in overseas markets. Revenue from easy-to-open cans increased by 11.97%, global orders for easy-to-open cans were transferred to China, and the rapid growth in the proportion of wet food in pet food led to demand under the upgrading of consumption. the company's products were further expanded from vegetables to meat, seafood and other fields, the product structure was optimized, and the gross profit margin was greatly increased to 33.34%.
The company can easy to open the lid to increase the project to seize the opportunity of domestic demand and export growth, internal repair and external expansion to accelerate industry integration. The company will add 4 billion pieces of cans easy to open and cover production capacity, actively expand downstream customers to seize the opportunity of market growth. Through built-in capacity and extension mergers and acquisitions to accelerate industry consolidation, enhance bargaining power to promote profitability repair, enjoy the global demand market space, orderly release of capacity will improve performance.
Risk hints: raw material price fluctuation risk, M & An integration risk, overseas demand fluctuation risk
