Main points of investment
The performance in 2020 was affected by the epidemic: the company's operating income in 2020 was 22.877 billion yuan,-4.8% compared with the same period last year. Among them, the business income of packaged drinking water / tea / function / fruit juice / other products changed year-on-year-2.6%, 2.6%, 2.6%, 26.1%, 14.5%, 135.8%. The net profit is 5.277 billion yuan. Year-on-year + 6.6%.
If one-time expenses such as donations, exchange losses and listing are deducted, the net profit is 5.581 billion, + 1.7 per cent year-on-year. The company proposes to pay a final dividend of 0.17 yuan per share.
Continue to launch new products, pay attention to large packaged water and sugar-free tea: 1) packaged drinking water revenue of 13.966 billion yuan,-2.6% year-on-year, Zhongda packaged water has achieved double-digit growth. The company has launched tea, baby water, the company hopes to enter every field of water, in every market segment of water can have a high market share. 2) the annual revenue of tea beverage products is 3.088 billion yuan,-1.6% compared with the same period last year, which is better than the overall performance of the company, mainly due to the status of tea in Chinese culture and the increasing demand of young people for sugar-free tea. 3) the annual revenue of functional drinks is 2.792 billion yuan,-26.1% compared with the same period last year, mainly due to the lack of consumption scenes such as schools and sports venues during the epidemic. The company 2021Q1 has launched two new isotonic concept products, which are expected to be promoted during this year's Tokyo Olympic Games. 4) the annual revenue of fruit juice drinks was 1.977 billion yuan,-14.5% compared with the same period last year, mainly due to the reduction of dinner scenes during the epidemic.
Effective control of costs and expenses, significantly improved profitability: due to the reduction of product marketing during the epidemic, the company's sales expense rate was reduced by 0.1pct to 24.1% in 2020. Benefiting from the decline in PET purchase prices and social security deductions in 2020, the company's gross profit margin rose from 55.4% year-on-year in 2019 to 59.0% year-on-year.
Our point of view: from July to September 2020, the company controlled inventory in all channels, mainly because it could not predict the impact of the autumn epidemic, so it adopted a very sound business policy. In 2021, the company will dredge all channels and increase the promotion of brands and new products. In addition, in terms of channel management and operation, the company launched a new generation of Zhongtai system in the second half of 2020, which opened up the source data of sales revenue between various channels; 2021Q1, the company launched a new online detection system for small store activities, which makes it convenient for business staff to better manage the display expenses of small stores, which improves the transparency and timeliness of the company's management. Management's performance guidance for 2021 is that revenue will grow by 15% compared with the same period in 2020 and maintain this level of growth over the next 3-5 years. Investors are advised to pay attention.
Risk tips: food safety incidents; weak market expansion; new product promotion is not as expected; fierce competition in the industry