Event
1. On October 27, 2020, the Royal Group released its third quarter report for 2020.
During the reporting period, the company achieved an operating income of 1.709 billion yuan from January to September, an increase of 8.12% over the same period last year, and a net profit of 33 million yuan, an increase of 64.39% over the same period last year. The company Q3 achieved operating income of 695 million yuan in a single quarter, an increase of 16.39% over the same period last year. The company Q3 realized a net profit of 32 million yuan in the single quarter, an increase of 509.18% over the same period last year. The performance rebounded significantly.
2. On November 6, 2020, the company issued a reply on the feedback on the application documents for non-public offerings, and carefully checked and implemented the questions raised in the previous feedback notice issued by the CSRC.
Brief comment
The performance rebounded significantly, and the quality of statements continued to improve.
The operating income of 2020Q1/Q2/Q3 company is 350,000,000 yuan, and the year-on-year increase is-25.10%, 28.63%, 16.39%, 0.44, 0.45,0.32 million and-520.55%, 958.71%, 509.18%, respectively. Revenue and net profit continued to improve.
During the reporting period, the company's profitability improved significantly, and the company's Q1/Q2/Q3 single-quarter gross profit margin was 19.55%, 25.38% and 30.11% respectively, mainly due to the optimization of the company's product structure and the increase in the proportion of products with higher gross profit margin. In addition, the expense rate during the period of the company increased to a certain extent, reaching 26.7% during the single quarter, an increase of 7.52pct over the previous quarter and an increase of 3.49pct over the same period last year. In the current quarter, the sales expense rate, management expense rate and R & D expense rate were 12.96%, 5.77% and 4.64%, respectively, with an increase of 3.18pct, 1.33pct and 3.37pct, respectively, mainly due to the company's increase in product R & D investment and channel expansion in the third quarter.
The company's third quarterly report showed that notes receivable and accounts receivable accounted for 24.80% of income, down 24.77pct from the same period last year; accounts payable and notes payable accounted for 29.49% of income, an increase of 8.92pct compared with the same period last year.
During the reporting period, the net operating cash was 43 million yuan, becoming a regular employee for the first time in the year; the net operating cash in the single quarter was 99 million yuan, an increase of 74 million yuan from the previous quarter and 117 million yuan from the same period last year. The cash outflow from the company's investment activities increased by 330 million month-on-month, mainly due to the increase in civil engineering and equipment of the company's annual output of 200000 tons of Yunnan plateau characteristic dairy products intelligent factory, Yunnan Yundui animal husbandry Jianchuan ranch, Zunyi dairy engineering and other projects.
The company's third quarterly report showed that notes receivable and accounts receivable accounted for 24.80% of income, down 24.77pct from the same period last year; accounts payable and notes payable accounted for 29.49% of income, an increase of 8.92pct compared with the same period last year.
During the reporting period, the net operating cash was 43 million yuan, becoming a regular employee for the first time in the year; the net operating cash in the single quarter was 99 million yuan, an increase of 74 million yuan from the previous quarter and 117 million yuan from the same period last year. The cash outflow from the company's investment activities increased by 330 million month-on-month, mainly due to the increase in civil engineering and equipment of the company's annual output of 200000 tons of Yunnan plateau characteristic dairy products intelligent factory, Yunnan Yundui animal husbandry Jianchuan ranch, Zunyi dairy engineering and other projects.
Fixed increase project to enhance the competitiveness of core dairy industry
In terms of dairy and food business, the company formulated an effective business strategy after the epidemic, vigorously expanded new retail channels in the third quarter, and vigorously developed new products at the same time. From the product end, the company mainly promoted products such as "small yogurt", "my orchard" and "no food"; from the channel side, the company tapped the potential of third-and fourth-tier cities and towns during the epidemic and carried out new sales methods such as contactless distribution and live broadcast. From the point of view of production capacity, while vigorously improving the capacity utilization of the two major intelligent factories in South China and Hunan, the company has accelerated the construction of Laier Intelligent and Zunyi factories to further expand the scale of the company.
The company's additional projects are all related to the company's main dairy industry, demonstrating the company's determination to return to the main dairy industry.
Specifically, the intelligent factory project of Yunnan plateau characteristic dairy products with an annual output of 200000 tons will contribute to the transformation and upgrading of production equipment while expanding production capacity; the construction project of Zunyi dairy processing base can mainly reduce the company's cost, expand production capacity and develop high-end products such as low-temperature milk, forming a differentiated competitive advantage; the main purpose of the Bama probiotics industrialization production base project is to enrich the company's product structure. The main purpose of the new infrastructure project of fresh-to-home digital channel is to enhance consumer experience, improve the efficiency of fresh milk distribution and improve the efficiency of distribution; the project of Guangxi Buffalo Milk Engineering and Technology Research Center is mainly used to help improve the unbalanced development of dairy industry and solve the problem of insufficient supply in the region.
In addition, in terms of the information service industry, the company has established a strategic cooperative relationship with Shanghai Shangtang Intelligent Technology Co., Ltd. to vigorously develop areas such as artificial intelligence, big data mining and analysis, and cloud service platform. at the same time, the development of this sector business also provides favorable help to the dairy sector in precision marketing, improving online sales business and other aspects. Under the background of the rapid development of 5G network construction, the company's information service business is also better than TAL Education Group.
Investment suggestion: we expect the company's revenue from 2020 to 2021 to be 2.557 billion yuan and 2.979 billion yuan respectively, an increase of 13.5% and 16.5% respectively over the same period last year. From 2020 to 2021, the net profits returned to the parent company were 61 million yuan and 90 million yuan respectively, with year-on-year increases of 24.5% and 47.5% respectively, corresponding to 70.5x and 47.8x respectively, corresponding to PE of 70.5x and 47.8x respectively.
Risk factors: competition in the dairy industry has greatly intensified; the development of information service business is not as expected.