On August 24, 2023, Junyao Health released the semi-annual report of 2023.

Main points of investment

Performance is in line with expectations and downstream demand picks up

2023H1 revenue of 879 million yuan (with an increase of 110%, 2022H1 revenue of 419 million yuan after the company restated some of its 22Q4 business using the net method) is due to the increase in downstream consumer demand brought about by the macroeconomic recovery, with a net profit of 48 million yuan (up 5%). First half gross margin 24.88% (same as minus 7pct), net profit 5.80% (same as minus 2pct); rate of sales expenses 11.14% (same as minus 4pct), rate of administrative expenses 6.29% (same as minus 1pct); proportion of business tax and surcharge 0.45% (same as minus 0.5pct) The net cash flow of operating activities is-60 million yuan, which is due to the increase of the final balance of accounts receivable in the previous period, resulting in less net cash flow from previous operating activities. Of these, 2023Q2 revenue is 434 million yuan (up 48%), net profit is 24 million yuan (same as minus 12%), gross profit is 27.26% (same as minus 4pct), net profit is 5.98% (same as minus 3pct), rate of sales expenses is 12.25% (same as minus 2pct), rate of management expenses is 6.87% (same as increase of 1pct), proportion of operating tax and additional is 0.44% (same as minus 0.2pct), net cash flow of operating activities is 32 million yuan (same as minus 305%).

Lactic acid bacteria continue to make efforts to promote new product innovation

In terms of products, the revenue of 2023H1 lactobacillus beverages / probiotic beverages / probiotic food / other beverages / beverage supply chains / other commodity supply chains is 3.430.12 pounds 0.70 pounds 0.28 pounds 0.02 million yuan, compared with the same period last year, + 5% Lactobacillus beverages 13% hands 221% Lactobacillus products 85%, the company launched new probiotics products in the first half of the year to generate some upfront investment. Among them, the revenue of 2023Q2 lactobacillus beverage / probiotic beverage / probiotic food / other beverage / beverage supply chain / other commodity supply chain revenue is 1.63pm 0.07cm 0.41pm 0.01pm 206pm 0.01 million, compared with the same period last year + 7%, + 7%, 20%, 229%, 329%, 89%. From a sub-channel point of view, the revenue of 2023H1 distribution / direct sales is RMB 7.93 million, which is 140% higher than that of the same period last year. Of this total, the revenue from 2023Q2 distribution / direct sales was 384 million yuan, compared with the same period last year, + 39%, 19.7%. From a regional point of view, the revenue of 2023H1 e-commerce / East China / Central China / South China / Southwest / North China / North China / Northwest / overseas is 0.23, 6.28, 1.02, 0.33, 0.33, 0.12, 0.10, and 0.19 million yuan, respectively, compared with the same period last year, and + 1%, 85, 000, Among them, the revenue of 2023Q2 e-commerce / East China / Central China / South China / Southwest / Northeast / North China / North China / Northwest / overseas is 0.12Universe 3.07Universe 0.1Universe 0.20Universe 0.18Universe 0.07Compact 0.05 / 16 million yuan, compared with the same period last year + 15% Plus "50% Universe" 3% RMB74% Universe 32% Universe 11% Plus 101% Plus 52%. As of 2023H1, the company had 1353 dealers, an increase of 124 over the beginning of the year.

Profit forecast

It is estimated that the EPS for 2023-2025 will be 0.48 pound 0.71 pound 1.04 yuan, and the current share price corresponding to PE will be times that of 27-18-12, maintaining the "buy" investment rating.

Risk hint

Macroeconomic downside risks, market competition aggravating risks, rising costs, market growth of probiotics is not as expected, profit integration is not as expected, and so on.