Event: Australian excellent Dairy publishes its quarterly report for 2021. Q1 realized operating income / homing net profit of 21.8 / 330 million yuan, compared with the same period last year (+ 12.9%). (adjusted + 11%). The decline in the adjusted growth rate was mainly due to the fact that 20Q1 recorded a loss of 29 million yuan on changes in the fair value of derivative financial instruments, while the accounting impact of 21Q1 has been eliminated.
Hai Pu Nuokai milk powder has high double-digit growth and strong growth potential energy. The revenue of 21Q1 own-brand milk powder reached 1.05 billion yuan, + 36.5% compared with the same period last year, of which Hipnokai 1897 achieved revenue of 720 million yuan, + 58.7% (vs 2020 revenue for the whole year + 52.7%), the growth trend remained strong, exceeding market expectations, mainly due to the strengthening of domestic product upgrading and market differentiation trend, and the company's marketing strategy is accurate and effective. In 2020, Q2 began to sign the pianist Lang Lang as the global brand image spokesman in the 1897 business unit of Hipnokai, which exclusively named popular variety shows to enhance brand communication and sales promotion. The company plans to launch new products in 21Q3 and plans to expand its 4000-5000 terminal high-quality stores in an orderly manner in 2021. Hypokay is expected to maintain a high growth rate throughout the year. Other milk powder (Nolido, Menado) achieved revenue of 340 million yuan in the first quarter after the reorganization of the business department last year, + 4.9% from the same period last year, regaining the growth trend.
The recovery of goat milk powder shows, and the trend is improving throughout the year. 21Q1's own brand goat milk powder achieved revenue of 870 million yuan, year-on-year / month-on-month ratio of-7.1% to 15.3% respectively, and the share of revenue increased to 39.9% (vs20Q4 34.5%), showing a recovery.
Among them, the domestic income is-5.9% compared with the same period last year, mainly due to the high base caused by the channel hoarding caused by the epidemic in the same period last year; abroad-27.2% compared with the same period last year, the impact of the epidemic persists; domestic sheep's milk income is + 29.7%, and the proportion of income increases to 38.2% (vs20Q4 29.4%). The basic adjustment of channel channeling goods since 20Q2 has ended, the current channel inventory level is healthy, the terminal mobile sales have recovered, and the market price has gradually stabilized. This year, the company exclusively named variety "Drama New Life" and hit drama "superfluous son-in-law". Around Little Red Book, Zhihu and other channels to enhance brand strength and product reputation, we think that the fleeing of goods last year did not affect Jiabeite's position as the domestic sheep milk powder subdivision leader. With the continued recovery of dealer confidence and the continuous development of new customers, it is expected that 2021Q2-Q4 goat milk powder business will speed up under the low base last year.
Keep the profitability stable and improve the ability of cost control. The company's gross margin rose steadily from 46.5% of 20Q3 to 51.1% of 21Q1, compared with + 2.0pct. Year-on-year-2.8pct, mainly due to the impact of by-product prices and inventory provisions in European trading operations. In terms of expense rate, the sales / management expense rate was 25.5% and 8.0% respectively, which was the same as that of the same period last year. Thanks to the steady improvement of gross profit margin and good cost control, the adjusted net profit rate of the company reached 15.2%, which basically returned to the 20Q1 level, year-on-year / month-on-month respectively-0.2/+1.6pct.
The start of Q1 sets the tone for double-digit growth throughout the year. 2021Q1 still achieved high growth even from a high base, laying a good foundation for the performance target of not less than 15% growth for the whole year and sales growth of private brand products higher than the overall growth rate. The growth rate of the company's milk powder is eye-catching, the recovery trend of goat milk powder is established, and the product structure is expected to continue to be optimized.
In the medium and long term, the company has continuous R & D and innovation, reasonable product layout and good channel control, which is an escort for sustained growth.
Investment advice: buy-An investment rating, 6-month target price of HK $16.98. We expect the company's earnings per share from 2021 to 2023 to be 0.8,0.90 and 1.10 yuan respectively, and the target price is equivalent to 15x PE in 2022.
Risk tips: 1) increased competition for high-end infant milk powder; 1) food safety problems; 3) overseas epidemic spread and so on.