Essence Securities: Give Elite Buy rating with a target price of 28.7 yuan

2021-10-28Su Cheng, Sun Yu of Anxin Securities Co., Ltd. studied Yilite and released a research report "The impact of the epidemic is still continuing, looking forward to the recovery of consumption", this report gave a buy rating to Yilite, believing that its target price is 28.70 yuan, the current stock price is 24.5 yuan, and the expected increase is 17.14%.

Elite (600197)

Event: The company disclosed the third quarter report of 2021. In the first three quarters, the operating income/net profit attributable to the mother/the net profit attributable to the mother after deducting non-attributables was 1.464 billion yuan/266 million yuan/263 million yuan, an increase of 26.44%/31.63%/29.89% year-on-year. In the third quarter of the single quarter, the revenue/attributable net profit/net profit attributable to the mother after deducting non-attributable was 434 million yuan/ 0.54 billion yuan/ 0.54 billion yuan, a year-on-year change of +19.00%/-3.23%/+4.41%. Q3 performance was lower than expected, mainly due to tight control of the epidemic.

The impact of the epidemic continued, the pace of superimposed high-end wine sales was delayed, and the recovery of Q3 revenue was slower. 21Q3 company's alcohol revenue was 431 million yuan, an increase of 15.60% year-on-year, down 23.83% from the same period in 2019. 21Q3 high-end liquor revenue was 341 million yuan, an increase of 9.17% year-on-year, down 21.18% from the same period in 2019, and sales recovered less than expected. On the one hand, the rebound of the epidemic in Q3, the implementation of epidemic prevention and control in Xinjiang is strict, the cross-regional inspection is strict, the nucleic acid inspection in Urumqi has become a routine, the group meals and banquets continue to be restricted, and the damage to the tourism industry has also had a negative impact on local consumption. On the other hand, the company's sales arrangement adjustment has led to delays in the delivery of high-end wine, 1) since the return of Yiliwang Q2, the company has begun to deal with the matter of going to the warehouse, bidding, and payment, and has officially restarted the delivery since August; 2) the preparation mode of the small old cellar has been adjusted, but considering its own sales capacity, the plan is temporarily shelved, and the corresponding delivery progress has been delayed. 21Q3 company's domestic and foreign market revenue is 331, 100 million yuan respectively, due to the large merchants outside the province Zhejiang Shangyuan replaced the sales main body for the company, Q3 outside the xinjiang revenue caliber narrowed, mainly reflected in the company's brand operation center and e-commerce company sales, is expected to maintain steady growth outside Xinjiang after the caliber is restored.

The delay in sales of high-end liquor caused the gross profit margin of Q3 to decline year-on-year, and the advance collection declined; the change in the tax rate had a greater impact on profit. 21Q3 company gross profit margin of 43.49%, down 4.24pct year-on-year, mainly due to the lack of high-end wine sales, Q3 proportion fell 4.66pct to 79.0% year-on-year, while the company's expansion and consolidation of depreciation costs since February is basically fully reflected, is expected to increase costs in a single quarter of nearly 10 million yuan. 21Q3 company's sales expense ratio fell by 0.56pct to 6.03% year-on-year, and the management expense ratio fell by 0.57pct to 3.70% year-on-year, and it is expected that the sales and management rates for the whole year will be basically flat year-on-year. The balance of 21Q3 company's advance receipts (contract liabilities + other current liabilities) was 0.63 billion yuan, an increase of 0.11 billion yuan year-on-year, a decrease of 0.67 billion yuan from the previous quarter, mainly related to the delay in the sales arrangement of high-end wine. Q3 Taxes and surcharges accounted for 16.33% of revenue, an increase of 56.73% year-on-year, which has a greater relationship with poor sales.

The epidemic in Ili may cause disturbances to Q4, and we are waiting for the return of King Yili to bring positive changes. In the short term, due to the rebound of the National Day epidemic, Yili is still in a state of sealing, which has a certain impact on the company's logistics and transportation, product packaging and sales recovery, but considering the sales of high-end wine, it is expected that Q4 will still have a certain growth year-on-year. In addition, with the return of the Yiliwang brand, the company will build the sales team accordingly, and carry out the Yiliwang brand launch, and will plan to upgrade the product in the future, further activate the growth momentum, and is expected to make a positive contribution to the net profit margin. With the gradual recovery of the consumer market in Xinjiang, it is optimistic that the company will resume and maintain steady growth under the leading edge of Xinjiang's share.

Investment advice: The company is expected to earn 0.88 yuan and 1.15 yuan per share in 2021-2022, and give a target price of 28.70 yuan, corresponding to 2022PE25x, and give a buy-B rating.

Risk Warning: The possibility of repeated epidemics may cause the recovery of consumption in Xinjiang to be less than expected; product price increases will lead to less than expected sales growth; depreciation will affect profits.

A total of 2 institutions have given ratings and 2 buy ratings in the last 90 days; the average target price of institutions in the past 90 days has been 32.2; the Securities Star Valuation Analysis Tool shows that 600197 has a good company rating of 3 stars, a good price rating of 3.5 stars, and a valuation composite rating of 3 stars.