Minsheng Securities: Give Yanghe shares a buy rating

2021-10-27Minsheng Securities Co., Ltd. Wang Yanhai, Yao Qipan conducted a study on Yanghe shares and released a research report "Non-recurring profit and loss disturb profits, Dream Blue leads the operation to be good", this report gives a buy rating to Yanghe shares, the current stock price is 179.39 yuan.

Yanghe Shares (002304)

1. Overview of the incident

On October 26, the company released three quarterly reports, achieving revenue of 21.94 billion yuan and YoY +16% in the first three quarters of 2021, and achieving net profit attributable to the mother of 7.21 billion yuan, YoY +0.37%.

2. Analysis and judgment

Changes in fair value affect profits, and product mix moves up to drive up gross margins

2021Q3 the company achieved revenue of 6.4 billion yuan, YoY +16.6%, achieved attributable net profit of 1.55 billion yuan, YoY-13.1%, fair value loss of 370 million yuan, mainly due to the decline in the stock price of BOC Securities in Q3, achieving a non-attributable net profit of 1.68 billion yuan, YoY +23%; gross profit margin of 76.15%, the same increase of 2.99pct, the product structure moved up to produce a positive contribution to the gross profit margin, sales expense ratio of 13.48%, sales expense ratio of 13.48%. The same decline of 4.48pct, management expense ratio of 7.15%, the same decline of 3.61pct, the decline in the expense ratio during the period contributed to profit elasticity; cash collection of 8.03 billion yuan, YoY + 40.6%, significantly faster than the growth rate of revenue, net cash flow from operating activities of 4.682 billion yuan, YoY + 34.6%, the balance of contract liabilities of 6.51 billion yuan, an increase of 990 million yuan.

The operation mechanism is straightened out, and Dream Blue has achieved core growth poles

The company's reform has continued to deepen, after the replacement of the main product, the fission of organizational functions and the reform of the channel-side "one-quotient, multi-merchant matching" model, the reshaping of the leading product value chain, the recovery of confidence at the channel end, and the inflection point of the revenue end. "Dream Blue" as the company's high-end carrier, the core single product M6 + in advance to lock the sub-high-end 700 yuan high line price band, has grown into a core large single product, M3 upgrade new dream blue crystal edition 400 yuan + price segment ladder to undertake, it is expected that the sea, the sky basic disk after 2020 inventory destocking consolidation, the price steadily returned to rigidity.

The "100-day offensive" stimulates vitality, and the new management shapes new momentum

On February 23, 2021, Zhang Liandong was appointed as the chairman of Yanghe Co., Ltd., further clearly expressing the government's attitude of "making Yanghe bigger and stronger". In June, Chairman Zhang was in charge of sales work and promoted the "100-day attack" sales action. After half a year of running-in, the new management has added to the marketing strategy and tactics that have been formed, insisted on focusing on the development of Dream Blue M6+, and also stimulated the internal vitality of the enterprise, and it is expected that the company is expected to successfully complete the 15% income growth equity incentive target in 21 years.

Third, the investment proposal company's third quarter performance is in line with expectations, the revenue side in 2022 is expected to accelerate marginally, it is expected that the company's revenue in 2021 to 2023 will be 245/293/301 billion yuan, the net profit attributable to the mother is 77/100/12 billion yuan, the current stock price corresponding to P/E is 35/27/23X, and the valuation in 2021 is lower than the average valuation of the liquor industry by 47X (arithmetic average method, Wind is expected to be consistent in 2021), covering for the first time and giving a "recommended" rating.

4. Risk warning: 1) The sales and price of the leading products are less than expected; 2) the default risk of wealth management products.

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.