Guosen Securities: Gives Yanghe shares a buy rating

2021-10-27China Securities Co., Ltd. Chen Qingqing, Li Yilin conducted a study on Yanghe shares and released a research report "2021 Third Quarter Report Review: Revenue and deduction of non-net profit grew steadily, potential energy continued to rise", this report gave a buy rating to Yanghe shares, the current stock price is 179.39 yuan.

Yanghe Shares (002304)

21Q3 revenue and deduction performance grew steadily, and cash flow and advance receipts performed well

The company announced 21Q3 results, 21Q3 achieved revenue of 21.94 billion yuan (+16.0%), net profit attributable to the mother of 7.21 billion yuan (+0.4%), deduction of non-net profit of 6.85 billion yuan (+21.6%); 21Q3 revenue of 6.40 billion yuan (+16.7%), net profit attributable to the mother of 1.55 billion yuan (-13.1%), deduction of non-net profit of 1.68 billion yuan (+23.0%), revenue and deduction of non-performance performance in line with expectations, mainly related to dream series sales growth (expected dream 6+). the fastest growth rate) and Haitian sales resumed; the epidemic situation in the province was controlled in a timely manner, and the sales in the Mid-Autumn Festival peak season achieved good growth. Equity investment losses dragged down net profits, mainly due to the fluctuation of the stock price of BOC Securities. The company's profit quality is good, 21Q3 sales collection / operating net cash flow of 174.6 / 6.30 billion yuan (+49.2%/ +221.4%, faster than the revenue growth rate), the end of 21Q3 advance collection of 6.71 billion yuan, maintained a high level and continue to grow (+70.4% / moM +19.7%).

21Q3 gross margin increased year-on-year, and deducted non-net profit margin increased year-on-year

The company benefited from the optimization of the dream series and product structure, and the gross profit margin increased steadily, with a gross profit margin of +3.0pct to 76.2% year-on-year. A significant decrease in net income from changes in fair value in 21Q3 dragged down net margin; despite higher gross margin and lower rates, the 21Q3 sales/management expense ratio was -4.5pct/-3.6pct to 13.5%/6.6% year-on-year due to improved expense efficiency, but the operating tax rate rose to 18.9% (+5.7pct) due to seasonal fluctuations in tax recognition; net profit margin under the combined impact was -8.3pct to 24.3% year-on-year, and the net profit margin after deducting non-net profit margin actually increased by 1.3pct to 26.3%.

The improvement trend is obvious, the brand and channel potential can continue to rise, and the recovery growth of the 14th Five-Year Plan can be expected

Combined with channel feedback, the dealer collection task is basically achieved, the current inventory and price plate are benign, the product upgrade is smooth, the dream 6 + national volume leads the growth, the crystal dream is stable and good, the sky blue new and old alternately advance steadily, and the growth is expected to accelerate in the coming year. With the appointment of the new chairman and the landing of equity incentives, the company's endogenous potential is strengthened, and it is expected to continue to benefit from consumption upgrades and sub-high-end expansion.

Risk warning: macroeconomic risks, high-end wine demand is less than expected, product upgrades are less than expected.

Investment advice: upward revision of the previous earnings forecast, maintaining the "buy" rating is optimistic about the acceleration of the company's growth, considering the fluctuation of non-recurring gains and losses, slightly raising the revenue forecast, downgrading the fair value change income, corresponding to the downward revision of the net profit forecast attributable to the mother, it is expected that the diluted EPS for 21-23 will be 5.04/6.40/7.49 yuan (previous value is 5.55/6.72/8.02 yuan, a decrease of 9%/5%/7%), and the current stock price corresponds to PE of 36/28/24x, maintaining the buy rating.

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 Securities Star Valuation Analysis Tool 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.