Matters: the company disclosed its 2020 interim report on November 19, and reported revenue of approximately HK $4.41 billion for the six months ended September 30, 2020, a decrease of 5.85% compared with the same period last year. Operating profit was about HK $929 million, an increase of 28.75% over the same period last year. Profit attributable to shareholders was about HK $672 million, up 26.01 per cent from a year earlier. Earnings per share were HK63.1 cents; dividends per share were HK3.8 cents.

Under the influence of the epidemic, strict fee control and steady recovery of offline consumption: (1) income side: by region, the group's income for the six months ended September 30, 2020 was HK $4.41 billion, of which the income of mainland China / Hong Kong, China / Australia and New Zealand / Singapore was HK $31.68 million, respectively. The proportion of income is 70.88%, 22.31%, 5.42%, 1.39%, respectively, compared with-3%, 14%, 4%, 7%, respectively. Sales in the mainland business fell sharply by 23% in April, mainly due to the impact of the epidemic. As the retail market and market environment turned normal, revenue increased from May to September compared with the same period last year; Hong Kong business continued to repeat due to the epidemic, which seriously affected the school business of Vitaly; Australia and New Zealand businesses affected consumers' spending in restaurants due to the continued city closure in Victoria; although Singapore business was affected by the epidemic, revenue still increased moderately compared with last year. (2) expense side: due to the company's strict management and control of expenses such as advertising and promotion, as well as epidemic subsidies provided by the government, marketing, sales and distribution expenses are-22% year-on-year, administrative expenses are-7% year-on-year, total operating expenses are-17% year-on-year, and the company's gross profit margin remains 55%.

E-commerce channel performance is excellent, Dongguan factory put into production to support mainland production capacity: the company goes hand in hand in product, marketing and production capacity. (1) Marketing end: Vitasoy adopts a two-pronged approach in digital management transformation and new retail channel innovation. According to CEO Zhong Tingyi, Vitasoy GMV increased 97% year on year in Singles Day full channel, of which Tmall flagship store GMV growth rate was 307%. O2O box horse channel GMV growth rate 165%. Both Tmall and JD.com have GMV growth rates of more than 50 per cent. Star map data released by the 11.11 live sales data also show that in the food and beverage industry hot category sales list of TOP20 brands, Vitasoy won the first place On the Food and Beverage double 11 JD.com Race list on November 11, Vitasoy ranked first in beverage brand sales. Among them, 30 boxes of soy milk packed in rainbow customized Vitasoy milk won the top spot in the list of popular brands and popular commodities in Tmall's plant protein beverage category. (2) Product end: aiming at the mainland market, the company makes addition on the basis of plant milk. On the one hand, it uses "health addition" to launch a brand new double plant milk. While taking into account both nutrition and delicacy, the upgrade on the packaging also gives consumers a more convenient consumption experience. On the other hand, the "Coffee Master" perfectly combines coffee with plant milk and launches a variety of special drinks such as soy milk Bols tea, coconut style oatmeal latte and so on, which are highly sought after by consumers. For tea drinks, it also continues to enrich the product matrix. Following new flavors such as Bingshuang and Ceylon black tea, grapefruit passion fruit jasmine tea and pineapple green plum oolong tea are launched one after another. (3) in terms of production capacity: in order to accelerate the pace of nationalization, the company has invested more than 1 billion yuan to set up a new factory in Dongguan from the high penetration of the South China market to the northern market and even the national market. The new factory is expected to meet the demand for capacity growth within at least three years. With the commissioning of Dongguan factories across the country, Vitasoy has the most advanced technology and equipment in the supply chain capacity guarantee system in East China, South China, Central China and other places. it can also be used to meet the real-time logistics delivery services of various channels across the country, including new retail channels, especially emerging e-commerce channels.

Investment advice: as the epidemic gradually abates, the company picks up again after fluctuations. The lemon tea market is expected to continue to increase volume and usher in a simultaneous rise in volume and price. And the company is also in the plus code online channel, through cross-border cooperation to broaden the product consumption scene, superimposing the stable release of the company's production capacity, we adjust the company's profit forecast. It is estimated that in 2020-2022, the company's income will be 7502x8402 million, the profit attributable to equity holders will be HK $7660,868 million, and the EPS will be HK $0.690.72pm, corresponding to PE46/44/39.

Risk tips: consumption upgrading is not up to expectations, brand publicity is not up to expectations, food safety problems, epidemic situation repeatedly affect consumer demand.