Events. The company released its semi-annual report for 2023: 23H1 achieved a total operating income of 14.139 billion yuan, year-on-year-1.9%, and a net profit of 338 million yuan, + 20.1%, of which Q2 achieved a total operating income of 7.068 billion yuan in a single quarter,-1.3% year-on-year, and a net profit of 151 million yuan, + 30.1%.
Liquid milk continues the growth trend, and animal husbandry is a drag on revenue performance. Sub-products: 23Q2 dairy revenue is-0.4% year-on-year, of which liquid milk revenue is + 5.4%. We think it is mainly due to the fact that the base market in Shanghai was greatly affected by the epidemic in the same period in 22 years, and the consumption scene gradually recovered in 23 years. Other dairy products revenue is-9.8% year-on-year, we think it may be affected by the poor performance of overseas milk powder business (New Zealand New Wright 23H1 revenue + 0.4% year on year) Revenue from other main businesses is + 36.4% year-on-year, which we think may be related to the growth of ice cream business; revenue from animal husbandry products is-23.5% year-on-year, narrowing month-on-month decline (23Q1-31.2%). Sub-region: 23Q2 recovered significantly in Shanghai, with revenue of + 11.1% year-on-year; revenue of non-local / overseas markets was-2.8% and 8.9% respectively compared with the same period last year. Sub-channel: 23Q2 dealer channel revenue remains robust, with direct sales / distribution channel revenue accounting for 23.3% and 76.0% respectively. The company continued to sink its power channels, with a net increase in the number of 23Q2 dealers by 112 to 4025, of which Shanghai / non-local dealers increased by 8104 to 4463579 respectively.
The cost reduction boosted the gross margin and the return net interest rate continued to rise. 23Q2's gross profit margin ranged from + 1.86pct to 20.3% year-on-year, mainly due to the downward cost of raw milk (23Q2 average price-6.8% year-on-year) and the increase in the proportion of liquid milk sector with high gross margin (year-on-year + 3.54pct). 23H1 sales expense rate year-on-year-0.02pct to 12.2%, mainly due to marketing expense rate year-on-year-0.50pct. The expense rate during the 23Q2 period is from + 2.55pct to 17.2% compared with the same period last year, of which the sales / management / R & D / financial expense rate is from + 1.51pct/+0.71pct/+0.05pct/+0.28pct to 12.5% to 12.5%, respectively. Benefiting from higher gross margins and lower income tax rates (year-on-year-9.50pct), 23Q2 homed net interest rates were + 0.52pct to 2.1 per cent year-on-year.
Based on innovation and lead, tamp the development of milk source. The company continues to promote new products, and 23H1 has developed and listed 30 new products, including Changyou 0? Flavor fermented milk series, Youbei organic fresh milk, etc.; **** milk powder, registered and listed 3 series of new products to meet the diversified needs of consumers; ice cream business, **** Youbei fresh milk ice cream Dahongrobe tea flavor, **** × rabbit crispy cone ice cream and other new products perform well. The construction of milk source continues to advance, and the company completed the construction of Ningxia Zhongwei, Anhui Funan, Anhui Huaibei, Hachuan II and Jinshan projects in the first half of the year, among which Ningxia Zhongwei and Anhui Funan projects have been checked and accepted. At present, **** animal husbandry cattle health level, fresh milk quality and cow yield and other indicators reached the best level in history.
Profit forecast and investment advice. We estimate that the EPS of the company in 2023-25 is 0.47,0.55,0.68 yuan per share respectively. With reference to the valuation of the comparable company, we give the company 20-25 times Ppace E in 2023, corresponding to a reasonable value range of 9.34-11.68 yuan, maintaining a "better than the market" rating.
Risk hint. The price of raw materials fluctuates greatly, the competition in the industry intensifies and so on.