Main points of investment:
Maintain the overweight rating. Strong performance stability, significant R & D and customer advantages, the growth path of the three major business sectors is clear, maintaining EPS 2.08,2.22,2.42 yuan in 2020-2022, considering the development of follow-up new business, giving 30XPE in 2021, raising the target price by 66.50 yuan (the previous value is 37.54 yuan).
The performance is in line with expectations. In 2020, H1 Company achieved revenue of 936 million, year-on-year-4.14%, home net profit of 546 million, year-on-year-3.98%, non-net profit of 470 million, year-on-year-4.77%. Among them, Q2's single-quarter income was 490 million,-7.87% compared with the same period last year, and the net profit returned to its mother was 277 million, which was basically the same as the same period last year.
The growth of daily flavor is eye-catching, and the overall profit stability is strong. In terms of business, 2020H1 food flavor business is-4.7% year-on-year, in which tobacco flavor is expected to be relatively stable; food ingredient business is-8.34% year-on-year, mainly due to fluctuations in customer demand from downstream catering enterprises. The demand for anti-epidemic, disinfection and sterilization products has increased, and the revenue of daily flavor is + 36.05% compared with the same period last year, showing an accelerated growth trend, and the effect of business integration and expansion is remarkable. At the profit end, the gross profit margin was basically the same as the same period last year, the sales and management rate expense rate 8.05%/-1.3pct, 14.5% /-1.93pct, the interest income decreased by 14.61 million, and the overall net profit rate was basically the same. Operating cash flow 507 million, year-on-year + 16%.
R & D-driven, synchronous expansion of endogenous epitaxy. The company's R & D strength and talent team have significant advantages. The rate of 2020H1 R & D expenditure is 6.7%. As of June 30, there were 192 R & D technicians, including 72 perfumers. With the continuous growth of endogenous technology upgrading and product innovation, tobacco flavors actively layout HNB new tobacco, which has formed a relevant sample database and database; food flavors and food ingredients focus on plant extraction, and the product line of daily use plate continues to extend. Extension from the perspective of complementary products, complementary channels, complementary upstream and downstream of the industrial chain to find integration opportunities to strengthen business development.