Angel yeast (600298) 2018 and 20191Q performance review: the company is still in a high growth stage
Investment Highlights: The company released its 2018 annual report: In 2018, the company achieved a revenue of 54 from the yeast series.
7.3 billion, an increase of 24 a year.
16%; revenue from packaging materials business2.
29 trillion, an increase of 23 in ten years.
12%; income from sugar business3.
24 ppm, a decrease of ten years ago2.
The gross profit margin of the company’s yeast business was 39 in 2018.
07% downgraded by 2 per week.
62 units; gross profit margin of packaging materials business is 13.
61%, down 9 in ten years.
56 units; gross profit margin for sugar business is 7.
35%, downgraded by 11 every week.
In 2018, the company’s period expenses were 20.
83%, a year rose 0.
In 2018, the company realized a net profit attributable to shareholders of listed companies that replaced non-recurring gains and losses8.
1.8 billion, with a previous appreciation of 2.
The company’s yeast products have grown rapidly.
From 2001 to 2018, the company’s annual average yeast revenue increased by 21.
58%, yeast sales scale from 1.
9.6 billion steadily expanded to 54.
7.3 billion, as of 2018, the global market share reached 12%.
According to the company’s expectations, the company’s sales scale will reach 8 billion and 10 billion in 2020 and 2021.
In 2018, the company’s yeast series sold 25 products.
Period 16, an increase of 12 over 2017.
In addition, according to our calculations, the ton price of the company’s yeast products in 2018 increased by nearly 11%, and the increase in volume and price made up for the rapid growth in current revenue.
In 2018, the global economy achieved mild growth, and a favorable external demand environment has greatly promoted the company’s global sales growth, and it is the most effective way to increase the volume and price of yeast business in 2018.
It is worth mentioning that in 2018, despite the constant trade frictions, the company still achieved satisfactory growth in the North and South American markets.
The trade agreement does not involve the product categories produced by the company for the time being, so it will not directly affect the company’s sales in the United States.
In 2016, 2017, and 2018, the company’s yeast products, regardless of sales volume or price, showed a trend of go hand in hand, showing the company’s determination to expand the global market and establish a brand.
Historically, the company’s yeast pricing in the global market has always left enough room for the current price increase expansion. Therefore, with the steady increase in sales, we expect that the yeast ton price will still increase in the next three yearsPotential to gradually complete the sales target of 10 billion yuan set by the company.
Despite the increase in the ton price of yeast, the company’s gross profit margin for yeast products in 2018 remained low.
We judge that this is caused by the excessive increase in production costs in the current period, which exceeds the increase in revenue.
In 2018, the company’s yeast production costs increased by 29.
73%, an increase of more than 5 units in revenue.
The production cost is too large, the reasons may be: First, the prices of primary and secondary raw materials have risen too quickly; Second, insufficient capacity utilization has led to an increase in unit fixed costs.
In 2018, both international and domestic sugar prices are in a declining cycle: the sugar price index prolonged by the United Nations has dropped by 21.
9%, the domestic spot sugar price index fell by 17.
In view of this, we believe that the company’s excessive production costs in 2018 were due to insufficient capacity utilization.
According to the company’s annual report: In 2018, the production of Anqi Yili’s factory was insufficient, and the release of production capacity of Anqi Chifeng was also affected by the relocation of the factory; and the production costs of Anqi’s Egyptian factory, including raw material and energy prices, increased rapidly.
Concerns about insufficient start of the company’s main factories in 2018: In 2018, the company mainly concentrated in the first half of the year. The company’s three factories in 杭州桑拿网 Chongzuo, Yili and Chifeng received enquiries from local environmental protection departments.
We expect that due to the company’s active cooperation with environmental protection rectification in the second half of the year, the production of the plant will be limited to a certain extent, which will lead to insufficient capacity utilization subjectively, and the impact on the Yili plant will be relatively disturbed.
Under the influence of the incident, the net profit margin of the Yili plant in 2018 was 5 to 6 stacks lower than normal.
We believe that in 2019, the company will increase the emphasis on environmental protection issues of local factories. Through technical and management improvements, it will do its best to improve environmental protection capabilities and avoid similar incidents.
In fact, the problem of underutilization of capacity in 2018 is temporary, not a structural issue, and will not affect the company’s long-term performance.
In addition, the expansion and expansion project of Anqi Chifeng’s production capacity will be extended to 2019, which will still have a certain impact on the performance in 2019.
In 2018, the gross profit margin of the company’s sugar business was severely reduced, which was due to the sharp drop in sugar prices during the period.
In 2018, the gross profit margin of the company’s sugar business increased significantly, first of all due to the transmission of the current drop in sugar prices.
The domestic sugar price has fallen for two consecutive years and is currently nearing the bottom of the cycle. In 2019, the probability of upward breakthroughs will increase the profit of the company’s sugar business and the profit of sugar manufacturing should be better than 2018.
In 2018, the gross profit margin of the company’s packaging materials business also increased.
According to our calculations, in 2018, the ex-factory ton price of the company’s packaging materials actually increased, but the price increase could not fully restore the growth of raw material prices and production costs, resulting in a decline in gross profit margin.
As the prices of raw materials such as glass and cardboard increased significantly in 2016 and 2017, costs rose to the midstream processing industry in 2018, squeezing midstream profitability. At present, this trend continues into the first quarter of 2019.
However, looking at the current trend of the PPI, the driving force is more sufficient. We believe that the situation of higher industrial costs will improve by the second half of this year.
Therefore, the profit of the company’s packaging materials business will pick up slightly in 2019, which is better than 2018.
In 2018, the company’s net profit margin fell 2 times to 13.
46% is due to the decrease in gross profit margin and the increase in expense ratio during the period.
In 2018, the management expense ratio was downgraded to 0 in half a year.
37 shares per share, sales and financial expense ratio increased by 0.
42 and 0.
The company incurred selling expenses for the current period7.
56 trillion, an increase of 20 in ten years.
Among them, the contradiction in the increase was Guangxuan, and the salaries of logistics and sales staff were 26 respectively.
22% and 20.
88%, basically growing in tandem with income.
In the cost structure, the two largest proportions are logistics and sales staff compensation, which are 33.
32% and 32.
55%, in line with the distribution characteristics of the large commercial system.
We believe that, given the company’s plans for market expansion and sales scale, higher sales expense growth will continue in the future, and it is more ideal to keep pace with revenue or slightly lower.
The company incurred financial expenses for the current period1.
29 trillion, an increase of 51% in ten years.
Among them, ^ 费 0.
900 million, accounting for nearly 70%, an increase of 36 in the current period.
55% is a major factor in the increase in financial expenses.
Due to development requirements, the company’s demand for financing increased significantly in 2018.
In addition, the exchange loss caused by exchange rate fluctuations in 2018 is also the reason for the increase in financial costs. The impact of these factors accounts for about 30%.
Overseas production capacity is operating well, and the profitability of the Egyptian plant is an important variable.
In 2018, the company’s sales growth in the domestic and foreign markets was basically flat, and after both experienced high growth, it fell back to a stable growth range of 15% to 20%.
The gross profit margin of domestic production capacity is 39.
72%, foreign production capacity is 28.
21%, others are lower than the former, mainly due to the company’s low-cost strategy to gain global market share.
However, the domestic and domestic factories, the company ‘s overseas factories ‘cost growth is smaller and more gradual, and the company ‘s bargaining power in the international market is also increasing. Therefore, the company ‘s overseas production capacity gross margin increased steadily.
The rate and tax rate of the Egyptian factory are much higher than those of the Russian factory. In 2018, caused by Egyptian doping, the net profit margin of the Egyptian production capacity was 15 years higher than in 2017.
Five averages are used to replace the profitability of domestic core factories.
For the Egyptian factory, 2018 may be a year with a poor environment. Through the commissioning of yeast extracts and the enhancement of economies of scale, endogenous kinetic energy will replace some negative factors in the environment.
Looking at the company’s 20191Q report data, we judge the following: 20191Q, continuing the trend of 2018, the company’s revenue growth is indeed true, but also maintained a growth rate of 11% to 12%, which is at the center of the company’s long-term growth.
In 20191Q, the company’s sales and management expenses increased far more than revenue growth, continuing the momentum of expense expenditure in 2018, and even intensified the expansion of the content.
In 20191Q, the company’s production cost is still high, and it is expected to decline in the second half of the year.
It is expected that the cost growth will be lower than the revenue growth in the second half of the year, and the company’s profit will change positively.
In 20191Q, the company’s adjusted operating profit was flat compared with the same period last year.
Overlapping non-recurring earnings appeared in the company’s income statement in the first quarter of 2018, leading to unreal replacements for operating profit in the first quarter of 2019.
When the non-recurring items in the same period last year are expected, the operating profit in the first quarter of 2019 will be flat for many years, in line with expectations.
20191Q, the company’s advance receipts income increased, increased by 86 in half a year.
11%, indicating that downstream manufacturers’ expectations for the outlook remain good.
With the expansion of the company’s overseas business, more and more factors affect the company’s performance.
In addition to the traditional analysis mode, the following factors currently affect the company’s performance: the RMB exchange rate range, the inflation levels in Egypt and Russia, domestic environmental protection costs, domestic revenue, and so on.
We will consider the changes in the above factors in our profit forecast.
The impact of the devaluation of the local currency on the company’s operations is two-sided, exerting both positive and distorting effects.
The devaluation of the local currency is helpful for the development of overseas customers, but the market pricing decreases with the devaluation of the local currency, so it also oxidizes the company’s income statement; the appreciation of the local currency poses a constraint on the development of overseas customers or foreign customers, but the increase in the local currency pricing positively affects the income statement.
In addition, during the appreciation of the local currency, if the company is in the period of overseas investment expansion, the appreciation of the local currency will greatly help the company to save investment costs.
Investment strategy: The company’s long-term growth logic has not changed.
The company’s market share in the domestic market has been very large, and the market increase due to the withdrawal of small suppliers has decreased.
We expect that the company will be committed to the expansion of the global market in the future, and by enhancing the pricing power of external markets, taking advantage of the cost advantage of overseas production capacity, it will increase sales and increase overseas profitability.
At present, the company is still in a relatively high growth stage, with future investment value growth dividends, improved performance and an estimated hub.
We predict that the company’s EPS in 2019, 2020 and 2021 will be 1.
36 and 1.
54 yuan, an increase of 13 in ten years.
25% and 13.
Refer to the closing price of 27 on April 26.
At 11 yuan, the company is expected to trade at 23 in 2019, 2020 and 2021.
9 and 17.
We maintain our “Buy” rating and give the company a 25x valuation, subject to the 2020 performance forecast. The target price for the next six months is 34 yuan, which is a gradual increase of 25 from the current one.
Risk reminders: Many risks faced by overseas operations, such as: geopolitical changes, exchange rate changes, local inflation, etc .; cost increases exceeding expectations, harming shareholders’ interests; limiting production for environmental protection standards, leading to reduced capacity utilization.