Cinda Securities: Gives Yanghe shares a buy rating

2021-10-27Ma Zheng of Cinda Securities Co., Ltd. conducted a study on Yanghe shares and released a research report "Focusing on long-term development, continuous improvement of operation", this report gives a buy rating to Yanghe shares, and the current stock price is 179.39 yuan.

Yanghe Shares (002304)

Event: The company achieved operating income of 21.942 billion yuan in 21Q1-3, an increase of 16.01% year-on-year; net profit attributable to the mother of 7.213 billion yuan, an increase of 0.42% year-on-year, deduction of non-net profit of 6.85 billion, an increase of 21.57%; of which, 21Q3 achieved operating income of 6.399 billion yuan, an increase of 16.66% year-on-year, net profit attributable to the mother of 1.551 billion yuan, down 13.07% year-on-year, and deducted non-net profit of 1.682 billion, an increase of 22.94% year-on-year.

The full-year growth target is steadily advancing and the cash flow is in good shape. Under the equity incentive, the company's revenue growth target for 2021 is 15%, and the target growth rate has been successfully achieved in the first three quarters, and it exceeds the annual revenue of last year, anchoring the annual target. In the first three quarters, the company's non-net profit has exceeded that of the whole of last year, and the growth has been stable. 21Q3 The company's sales collection was 8.03 billion, an increase of 40.63% year-on-year, and the operating net cash flow was 3.381 billion, and the cash flow was good. At the same time, the company's book advance collection at the end of the third quarter was 6.51 billion, an increase of 1 billion yuan from the previous quarter, leaving a certain revenue reservoir. We believe that after two years of adjustment, the company has entered a period of growth recovery and its operating conditions have continued to improve.

The dream series entered the growth period, and the product structure optimization increased the gross profit margin, thereby releasing the performance. 21Q3 The gross profit margin of the company was 76.99%, an increase of 3.83pct year-on-year, mainly due to the growth led by the dream series, and the product structure continued to be optimized. Dream 6+ After two years of generation adjustment, into the growth period, is the main driving force for the company's revenue growth; the crystal version has been completed during this year's Mid-Autumn Festival, National Day double festival, the price sorting was successful, occupying the Mainstream Sub-high-end Price Band of 400 yuan in Jiangsu; Sky Blue was listed in the third quarter, and the short-term market is still dominated by the sales of the old version of Sky Blue, and it is expected to be replaced after the Spring Festival in 2022. 21Q3 company's business tax and surcharge accounted for 18.89%, an increase of 5.72pct year-on-year; sales expense ratio of 13.48%, a year-on-year decrease of 4.48pct, mainly due to the impact of the epidemic in Jiangsu in July and August, the slowdown in expense investment; the management expense ratio was 6.64%, a year-on-year decrease of 1.57pct; the deduction of non-net profit margin increased by 1.35pct to 26.29% year-on-year, and profitability improved.

Salary increase, strict assessment, high enthusiasm of personnel. Since the beginning of this year, the company has increased the salary and remuneration of all employees and made equity incentives for core management, and the confidence of employees has improved and their enthusiasm is higher. Now the company emphasizes more digital assessment, in addition to sales assessment, but also to open the bottle consumption as the underlying assessment standard, strengthen the construction of product reputation, use word of mouth to win sales, take a virtuous circle road.

The first talk on the "four isms" set the tone for the development of the "Fourteenth Five-Year Plan". On October 11, Zhang Liandong, chairman of the company, put forward the "four doctrines" at the media exchange forum, namely qualityism, long-termism, altruism and valueism, and once again emphasized the "four supremes", that is, employees first, quality first, consumer first, ecology first, indicating his determination to strive for the company's long-term development. We believe that the appointment of the new leader has brought a positive side to the improvement of the company's operations, which is in line with the tone of the current company's re-entry into the upward period, and has long adhered to quality, benefited relevant stakeholders, and demonstrated the value of the company.

Earnings Forecast: We expect the Company's EPS for 2021-2023 to be 5.10, 6.27 and 7.50 rmb/share, respectively, maintaining a "Buy" rating.

Risk factors: repeated domestic epidemics; intensified competition in the industry; product replacement is less than expected.

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.