Report guide

Yiyatong is currently the largest FMCG distribution leader and the largest "FMCG O2O distribution platform" in China, and the company is stepping into the era of supply chain 3.0. After three years of restructuring, on the basis of traditional supply chain services and deep distribution marketing, the company creates a new growth pole at the profit end by developing high-margin brand operation business. The scale of brand operation business may reach 10 billion in 23-25 years. Profit end performance is expected.

Main points of investment

The largest FMCG distribution leader in China, continuously defining the supply chain

The company experienced supply chain 1.0 era (97-07, meeting market demand and providing basic supply chain services for enterprise non-core business outsourcing), supply chain 2.0 era (07-20 years, Yi Yatong created market demand, superimposed product innovation, brand operation, deep distribution + marketing and other innovative services on the basis of supply chain basic services), and is moving towards the supply chain 3.0 era (layout future). To the business ecological development of "basic supply chain service + 380platform + ecological chain company"), it takes 20 years to build the basic supply chain capability + 10 years to build the offline 380 system as the company's core competitiveness, in this process, the company's positioning has also changed from the FMCG supply chain leader to the FMCG channel leader, and then upgraded to the FMCG IP to build the leader. In the past 18 years, Shenzhen Investment Control has enabled the business development of the company (corporate rating and bank credit lines have been significantly improved), which has protected the restructuring and restructuring of the company in the past three years. On the financial side, the company reduced the risk and optimized the financing environment by divesting the non-performing assets acquired by the previous 380 platform. Through management and sales cost optimization, 380 platform quality improvement and efficiency improvement, asset divestiture, REITS, fixed increase and other ways to optimize the capital structure and reduce the debt ratio, 21Q1's revenue and profit growth rate reached 35.22% and 341.17% respectively. At present, the bottom of the company's performance has passed, and with the support of the brand operation business, the performance is expected to be reversed.

Change and immutability: three years of restructuring and reconstruction, about to break the cocoon into a butterfly

Unchanged: layout the supply chain ecology and create the largest fast consumer O2O distribution platform. With traditional supply chain services and in-depth distribution + marketing business with "380platform" as the core, the company has served more than 2600 domestic and foreign well-known brands and distributed more than 400000 categories of goods. at the same time, it covers more than 1.5 million terminal stores in the country's T1-4 urban market, building the country's largest FMCG O2O distribution platform with all-channel marketing ability. Compared with its competitors, the company's supply chain and distribution service base highlights the advantages of its multi-brand marketing and brand operation enterprises.

Change: three years of restructuring and reconstruction, about to break the cocoon into a butterfly. In the past three years, the company has achieved restructuring and restructuring through business model upgrading and business focus focus: 1) upgrade: business model iterative upgrade to build an integrated two-wing business structure. The company's business model has been upgraded from traditional supply chain business and distribution business to distribution + marketing business as the basic market and brand operation business as the growth pole model, and the "one body and two wings" strategy is put forward for the first time. In the future, the proportion of the company's online (including new retail) and offline business is expected to change from 1:3 to 2) focus:

Brand operation + private brand incubation business. The company sets up an open fission marketing platform to continuously empower brand operation through basic supply chain services, distribution partners and channel terminal advantages, so as to obtain higher profits. and establish a consumer industry fund to accelerate the incubation of own brands, realize brand investment mergers and acquisitions, and promote the growth of consumer ecological chain enterprises.

Beyond the expected development point: taking advantage of the trend of soy sauce and wine, the brand operation business is on the rise. Based on the understanding of small B, big B and C end, the company began to cultivate, empower and operate high-quality brands since 2017, combined with consumption trend reverse accurate selection (C2M), fully tap the brand potential, and launch brand operation business in the field of large consumption. Among them, the performance of the liquor sector is outstanding-in 2020, the company's liquor brand operation business, such as Diaoyutai Enamel Color and Guotai Black Gold decade, with less than 5% of revenue, achieved nearly 10% of gross profit. In 2021, the company will add a number of exclusive products to enrich the product matrix. Under the fever of soy sauce and wine, it is estimated that the scale will reach at least 4 billion yuan in 2025, and we predict that the liquor sector is expected to have a better performance than expected. As the company replicates the successful operation experience of the liquor sector to the fields of small household appliances and medical beauty with higher gross margins, we believe that the brand operation scale of the company can reach 10 billion yuan in 23-25 years, and the profit side can be expected.

Profit forecast and valuation

We believe that Yatong will benefit from the steady development of the basic plate, the accelerated development of high-margin brand operation business, the gradual divestiture of the project and the implementation of fixed increment. It is estimated that the income growth rate from 2021 to 2023 will be 15.4%, 12.5% and 11.8% respectively, and the net profit growth rate will be 273.5%, 46.9% and 42.7%, respectively. PE is 27,18 and 13 times respectively (both EPS and PE are calculated on the basis of current total share capital of 2.123 billion shares). Long-term performance growth is strong, the current valuation is cost-effective, the first time to cover the buy rating.

Catalyst: continuous consumption upgrading, smooth introduction of high-priced products; risk hints: the second outbreak of the domestic epidemic affects the overall mobile sales of liquor; the dynamic sales of high-end liquor is not as expected; financial problems; the risk of management change.