Event: Yiyatong announced that 2021Q1-3 achieved revenue of 53.13 billion yuan, an increase of 21.71% over the same period last year, and a net profit of 415 million yuan, an increase of 410.91% over the same period last year. Among them, the company's 2021Q3 realized operating income of 16.998 billion yuan, an increase of 14.69% over the same period last year, and a net profit of 158 million yuan, an increase of 667.10% over the same period last year.
Proper cost control, continuous optimization of business structure, outstanding performance of brand operation business and marketing business.
The company's 2021Q3 realized operating income of 16.998 billion yuan, an increase of 14.69% over the same period last year, and a net profit of 158 million yuan, an increase of 667.10% over the same period last year. The main reasons are 1) the company continues to optimize the business structure, under the strategy of "one body and two wings", the company changes from the basic supply chain model to the brand operation model, with low capital occupation and improved profit margin. Through the restructuring of the business structure in the past three years, the brand operation business has become a new profit growth pole, and the company continues to expand its high gross profit brand products (abstract 12, Hongxing 1949, Bai Auburn collection, Shanaluer, Milk Xiansen, etc.). At present, the comprehensive brand gross profit margin of most brand operation business is more than 20%. In terms of online and offline channel marketing capabilities, the company can operate online and offline marketing execution services for multi-category brands, with cross-category marketing capabilities, and the proportion of online and offline business is expected to change from 1:3 to 2R3 in the future; in brand management and operation capabilities, the company has the ability to reverse product selection across categories on the basis of multiple product categories of marketing and distribution services. 2) the company shuts down the projects with weak profitability and large amount of capital, and instead focuses on the more profitable brand operation business. 3) in the past, the company was limited by the high leverage of the supply chain enterprises, and the asset-liability ratio was high, but with the improvement of the quality and efficiency of the 380 platform and the divestiture of non-performing assets, it promoted the company's business transformation and expanded to the high value-added brand operation business. the company's financial risk has been reduced, the overall net interest rate has increased, and the company's asset-liability ratio and financial expenses will continue to decline in the future.
Obvious channel advantages to create a strong moat. Relying on its traditional supply chain business and in-depth distribution + marketing business with "380 platform" as the core, the company maintains a strategic cooperative relationship with more than 2600 brands around the world. It distributes more than 400000 commodity categories and covers more than 1.5 million retail terminals in urban markets at all levels across the country. In addition to national offline network services, it also covers Southeast Asia, Europe, the United States, Australia and other countries and regions. Successfully built the country's largest scale and strong channel marketing ability of FMCG O2O distribution platform. The company has used 24 years to build the full-link integration capability, its basic supply chain capability and offline 380 system give the company a strong barrier, the company also uses the "380 platform"
Low cost focuses on low-line cities with a low degree of development, huge market demand and high growth in the development of fast consumer goods.
Taking advantage of the style of soy sauce and wine, the operation model of liquor brand has been verified and will be radiated to the field of home appliances. In the brand operation of the company, the liquor sector is the current focus. It took only three years to successfully build several IP of Maotai-flavor liquor, achieving the good results of Diaoyutai and Guotai, and raising the scale of liquor brand operation to 1 billion yuan. Since 2018, the company has started to do brand operation, combined with user consumption trend direct connection manufacturing (C2M), to fully tap the brand potential, according to the company announcement, the basic goal is to achieve a scale of 40-5 billion yuan in brand operation of alcoholic beverages in three years.
In 2021, the company will further launch a number of brands to enrich the product matrix, although the share of soy sauce production and sales is small, but the product profit is strong, the gross profit is high, the industry profit scale is relatively large, showing an overall growth trend. On the other hand, the company has begun to carry out brand operation layout in the field of home appliances (Xinfeng Valley, Schneider, Tini Bear, etc.), or will continue the bright performance of the liquor brand operation model.
Stable management, optimization of financing structure, increase to promote the company's business transformation. Shenzhen Investment Control invested 2.4 billion yuan to become the largest shareholder of the company in 2018, which provides strong support for the development of the company. The company is expected to get the ecological support of Shenzhen Investment Control and enable the company to develop its multi-dimensional business. In March 2021, the company's plan for a fixed increase of no more than 2.8 billion yuan was approved. according to the company announcement, 2 billion yuan will be mainly used for the company's business transformation, that is, supply chain projects and digital projects, which will help the company to expand its high-margin brand operation business and improve the overall net interest rate. At the same time, 800 million yuan will be used to supplement the company's liquidity, improve the company's credit rating, reduce the cost of capital and asset-liability ratio, optimize the company's financing structure, and effectively reduce financing costs.
Stripping off non-performing assets and signing strategic agreements to boost the company's performance. According to the company announcement, the company intends to list and transfer the wholly-owned subsidiary Yushang small loan company, the listing base price is 550 million yuan, according to the announcement, Yushang small loan 2021H1 revenue of 20.2 million yuan, net profit of 580000 yuan, the impact on the company's 21-year performance is relatively limited, after the company divested financial business, the commercial structure is further clear. On September 9, the company signed the Purchasing Strategic Cooperation Agreement with Huahao Mechatronics to provide electronic components and other raw materials procurement and supply chain services for servers and electronic and communication equipment produced by Huahao Mechatronics. The amount of procurement and services provided during the cooperation period is 10 billion yuan per year. The implementation of the agreement is expected to have a positive impact on the company's operating results this year, which is conducive to the further enhancement of the company's brand influence.
Profit forecast and investment advice: we believe that Yatong will benefit from the steady development of the "distribution + marketing" model, the accelerated development of high gross margin brand operation business, the gradual divestiture of projects with large capital occupation and low rate of return, and the steady landing of fixed increment. The company's operating income from 2021 to 2023 is expected to be 815.7, 938.0, 104.12 billion yuan, an increase of 19.50%, 15.00% and 11.00%, respectively. The homing net profit was 1.05 billion yuan respectively, an increase of 413.00%, 40.39% and 24.26% over the same period last year. The corresponding EPS was 0.24, 0.34, 0.43 / yuan, and the corresponding PE was 24X, 17x, 14x, respectively. The rating was upgraded from "holding" to "overweight".
Risk hints: the second domestic epidemic drags down consumption and affects the overall mobile sales of liquor; the risk of management change; the problem of funds.
