Pacific: Gave Yanghe shares a buy rating with a target price of 222.0 yuan

2021-10-27Pacific Securities Co., Ltd. Huang Fusheng, Cai Xueyu, Li Xinxin conducted a study on Yanghe shares and released a research report "Yanghe shares: double increase in revenue and profit, the continuation of a good trend", this report gives a buy rating to Yanghe shares, believing that its target price is 222.00 yuan, the current stock price is 179.39 yuan, and the expected increase is 23.75%.

Yanghe Shares (002304)

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Yanghe co., Ltd. released the third quarter report of 2021, and in the first three quarters, the company achieved revenue, net profit attributable to the mother, and non-net profit attributable to the mother of 21.942 billion yuan, 7.213 billion yuan and 6.850 billion yuan, respectively, +16.01%, +0.37% and +21.57% year-on-year. Among them, Q3 revenue, attributable net profit and non-net profit attributable to the mother were 6.399 billion yuan, 1.551 billion yuan and 1.682 billion yuan, +16.66%, -13.10% and +22.95% respectively year-on-year.

Financial analysis: Q3 cash collection of 8.031 billion, +41% year-on-year, higher than the growth rate of revenue of 16.66%, contract liabilities + other current liabilities of 6.707 billion yuan, +2.77 billion yuan year-on-year, +1.104 billion yuan, at a high level in the same period of history, accounts receivable and bills 0.51 billion yuan, year-on-year -90% +11.5%, the quality of the statement is good.

Comments:

Revenue and profit doubled and continued to improve sequentially. In the first three quarters, the company achieved revenue of 21.942 billion, +16.01% year-on-year (Q1: +13.51%; Q2: +20.74%; Q3: +16.66%), and the growth rate continued to improve sequentially. Channel surveys show that in the third quarter, Dream 6+ continued the high growth trend in the first half of the year, the upgrade of the Dream 3 crystal version product has been basically completed, and the growth rate of Haitian has gradually stabilized. In addition, under the strategy of revitalizing Sujiu, Shuanggou continued the high growth trend in the first half of the year in the third quarter.

In the first three quarters, the company achieved a net profit of 7.213 billion, +0.37% (Q1: -3.49%; Q2: +28.61%; Q3: -13.10%), and a non-net profit attributable to the mother of 6.850 billion, +21.57% year-on-year (Q1: +19.01%; Q2: +27.50%; Q3: +22.95%), the difference between the growth rate of the attributable to the parent and the deduction of the company was large, mainly due to the impact of the gain and loss of the fair value change. Compared with the same period last year, it decreased by 699 million yuan, of which the investment of BOC Securities decreased significantly compared with the same period last year.

The base causes certain fluctuations and the profitability is stable. The gross profit margin in the first three quarters was 74.93%, +1.73pct year-on-year; of which the gross profit margin of Q3 was 76.15%, +2.98pct year-on-year, mainly related to the upgrading of product structure. The expense ratio during the first three quarters was 16.42%, year-on-year -3.18pct, mainly due to the large decline in sales expense ratio and management expense ratio, of which the sales expense ratio was 10.04%, year-on-year -1.42pct, the management expense ratio was 6.18%, year-on-year -0.97pct; of which the expense rate during the Q3 period was 20.23%, year-on-year -8.28pct, mainly the sales expense ratio fell sharply by 4.49pct, the revenue increased slightly, and the peak season promotion slightly reduced the expense rate. In addition, the management expense ratio fell by 1.56pct, and the research and development expense ratio decreased by 2.05pct, mainly related to the high base last year and the high revenue growth rate this year.

21-year outlook: The annual incentive target is highly certain. In July, the company launched equity incentives, and the performance appraisal requirements were 21 years and 22 years of operating income increased by 15% over the previous year, respectively. The overall operation in the first half of this year is good, dream 6+ continues to increase the trend, dream 3 crystal dream upgrade is completed, Haitian has also improved, the day has completed the packaging upgrade, at present, the first three quarters of the revenue to complete the annual target of 90%, we expect this year's 15% target to complete the certainty.

Future outlook: The 14th Five-Year Plan is clear, and new management + equity incentives will help the new journey. The company formulated the 14th Five-Year Plan to build a "12345" strategic system, to create a wave-leading Yanghe and a surging double ditch, to promote the sustained growth of the enterprise at a higher level and the steady improvement of quality, and at the same time put forward a high-end, national, branded, international "four synchronization" mechanism, the company's 14th Five-Year Plan is clear. In February this year, the company elected a new management, Zhang Liandong as the chairman of the company, Zhong Yu as vice chairman and president, And Liu Huashuang as vice president of the company. The new chairman has rich management experience, previously in charge of economic work, familiar with the situation of enterprises, with innovative and large project work experience. The launch of the core backbone shareholding plan basically covers the current middle and senior management and business backbone of the company, and we believe that this will fully mobilize the enthusiasm of the company, promote the reform and rejuvenation of the company, and will be conducive to the implementation and completion of the company's 14th Five-Year Plan. Investment advice: In the short term, the company is in an accelerated recovery period, and the inflection point of operation has emerged; in the medium term, the company's operation ideas are clear, the adjustment of the 19 and 20 years has begun to bear fruit, and the 21-year focus is on dream 6+ and crystal version dream 3. Personnel adjustments and equity incentives were launched to jointly help the implementation of the 14th Five-Year Plan. In the long run, the sub-high-end expansion, dream 6+ growth space is considerable, the company still has a leading edge in the sub-high-end market, while the channel profit recovery is expected to drive the Haitian Dream series to resume benign growth.

We believe that with the accelerated recovery of the company's operations, the overall growth will show double-digit growth in the coming years. It is expected that the revenue growth rate in 21-23 will be 16% (upward), 16% and 18%, and the net profit growth rate will be 8% (upward revision) (excluding investment income and fair value change gains and losses, net profit will increase by 20%), 18% and 20%, respectively. We are optimistic about the company's short-, medium- and long-term development trend, according to the 22-year EPS to give 35X valuation, one-year target price of 222 yuan, maintaining a "buy" rating.

Risk Warning: The epidemic has a greater impact on the consumption of the liquor industry, with sharp macroeconomic fluctuations and major flaws in company management.

A total of 33 institutions have given ratings in the last 90 days, with 28 buy ratings and 5 overweight ratings; the average target price of institutions in the past 90 days has been 224.42; the Valuation Analysis Tool of Securities Star shows that Yanghe Shares (002304) good company rating is 3.5 stars, good price rating is 3 stars, and valuation comprehensive rating is 3 stars.