Main points of investment
Revenue in the first half of 2021 fell 5.9% in May: the company achieved HK $4.41 billion in revenue in the first half of 2021 (six months ended September 30, 2020),-5.9% compared with the same period last year. From a regional point of view, income from mainland China, Hong Kong & Macau, Australia and New Zealand and Singapore were HK $31.36,9.77,2.37 and 60 million respectively, down 3.4 per cent, 14.1 per cent, 4.4 per cent and 7.4 per cent year-on-year, with revenues accounting for 71 per cent, 22 per cent, 6 per cent and 1 per cent respectively. The mainland market began to return to positive growth in May 2020.
The gross profit margin is maintained, and the decline in fees increases the net profit margin: the company's FY2021H1 realized a gross profit of HK $2.41 billion,-5.7% compared with the same period last year; and the gross profit margin was 54.6%, unchanged from the same period last year, reflecting the remarkable effect of reducing costs and increasing efficiency. The sales expense rate was-4.9pcts to 22.8% compared with the same period last year, mainly due to the reduction of offline AMP advertising due to the epidemic; the management expense rate was 8.0%, which was the same as the same period last year. The profit attributable to FY2021H1 shareholders was HK $672 million, + 26.0% compared with the same period last year, and the net interest rate was 15.2%, which increased 3.8pcts over the same period last year.
Good online sales performance, high-end chemical new products launch: the company's current sales channels are still super convenience stores and catering channels, online channels account for more than 10% of the company's total sales revenue, there is still a lot of room for growth. The company's main products Vitasoy and Vita lemon tea have been selling well on the online e-commerce platform for a long time, and Vitasoy ranked first in Taobao's soymilk / soy milk / vegetable protein beverage and tea materials sub-industry categories during the November 11, 2020. The company's products are positioned with good nutrition, good taste and high-end, and new products are constantly being launched in order to promote high-end. During the reporting period, the "healthy addition" series was launched in mainland China, adding Padan + Hawaiian fruit and oat + quinoa flavors.
Maintain a "prudent overweight" rating with a target price of HK $34.20: the company has returned to positive revenue growth since May 2020, and we expect FY2021 to achieve low-unit growth in mainland China. The company has a strong product power and a brand advantage in South China, but in the face of increasingly fierce industry competition, the company adopts the following ways to enhance its competitiveness: 1) committed to launching high-end products to increase the average sales price, expand market share; 2) promote commercial channels and enhance the penetration of catering channels. We expect the company's FY2021-2023 net profit to be HK $6.62 / 7.30 / 843 million, a compound growth rate of 16.3%. We maintain our "prudent overweight" rating on the company, with a target price of HK $34.20, with a PE corresponding to FY2021-2023 on 55-50-43.
Risk tips: fierce competition in the industry; capacity below expectations; slow recovery of demand.
