1Q21's performance is in line with our expectations.
The company announced 1Q21 results: revenue 500 million yuan, an increase of 37.0% over the same period last year, an increase of 13.6% from the previous year, a decrease of 20.5% compared with the same period of 1Q19, and a net profit of 60.82 million yuan, up 32.4% from the same period last year, down 5% from the previous year, and 12.8% lower than that of 1Q19. Gross margin / net profit margin year-on-year-6.2pptMaple 0.4ppt, compared with 1Q19-2.6pptUniver 1.1ppt, basically in line with our expectations.
Development trend
Revenue growth in 2020 was affected by the epidemic, and profit margins remained stable as a whole. Affected by the overall consumption situation and the lack of consumption scene, the company's operating income in 2020 was 1.3 billion yuan, a decrease of 26.1% compared with the same period last year. After adjusting the sales rebate, it decreased by 18.3% compared with the same period last year, of which the revenue from middle and high-end wine camps accounted for 67%. It's basically the same as in 2019. The volume / price of middle and high-end wine is-34.3% and 9.0% compared with the same period last year, and the price of middle and high-end wine is increased or reduced due to the increase in the price of raw materials and promotion; the volume / price of ordinary yellow rice wine is-8.8% and 16.0% compared with the same period last year. The company's profit margin is stable, and after adjusting transportation costs and sales rebates and promotion expenses, the company's gross profit margin is 4.5 ppt higher than that after 2019 adjustment, mainly due to the reduction of company discounts; the sales expense rate is 3.1 ppt higher than the same period last year after 2019 adjustment, mainly due to the relative rigidity of sales staff wages and the strengthening of e-commerce platform construction. Overall, the company's net profit margin remained relatively stable compared with the same period last year-0.3ppt.
1Q21 business is gradually recovering, focusing on the growth of new products and new channels. The company's 1Q21 revenue was 500 million yuan, an increase of 37.0% over the same period last year, including 36.3% for medium and high-end wines and 31.35% for regular wines, which is about 79.5% of the annual revenue of 1Q19. After considering the discount factor, the discount accounts for about 9.5% of the revenue in 2020, then the company's performance will return to the level of 90% in previous years, which is basically in line with our expectations. At the same time, we are concerned that the company will increase the construction of e-commerce platform and the reserve of new products in 2020. The company increases the construction of e-commerce platform and endows the main product matrix with daughter red characteristics to promote the development of the main business of yellow rice wine. In 2020, the revenue of high-grade yellow rice wine in the company's e-commerce platform reached 102 million yuan, an increase of 37.03% over the same period last year. At the same time, the company has stocked Jianhu 1952, Youxue snow, Yonghe Nine years and other products, we believe that this may break the limitations of yellow rice wine consumer groups, new products and new channels may enhance performance growth.
Profit forecast and valuation
We keep the profit forecast for 2021 unchanged, with a net profit of 175 million yuan in 2021 and a corresponding net profit of 224 million yuan when we introduce the profit forecast in 2022. The current share price corresponds to 53.5 times 2022 / 41.9 times earnings. Maintain a neutral rating and a target price of 11.30 yuan, corresponding to 52.2 times 2021 price-to-earnings ratio and 40.8 times 2022 price-to-earnings ratio, which is 2.6% lower than the current stock price.
Risk
Other wine markets are aggressive, eroding the market share of yellow rice wine; if you increase marketing investment but the accuracy is not enough, it is more difficult to achieve the expansion of consumption scenes and consumer groups; the cultivation and expansion of markets outside the province is unfavorable, resulting in lower-than-expected revenue.
