Zhongshun Jierou (002511) semi-annual report comment: Interim report performance continues to exceed expectations and raises profit forecast

Zhongshun Jierou (002511) semi-annual report comment: Interim report performance continues to exceed expectations and raises profit forecast

Event: The company’s net profit attributable to its mother increased by 37 in 19H1.

6%, following the 深圳丝袜会所 first-quarter report exceeding expectations, the interim report continued to exceed market expectations.

The company achieved revenue 31 in 19H1.

7.2 billion (+ 22% YoY).

7%), net profit attributable to mother 2.

7.5 billion (+ 37% YoY).

6%), deduct non-attributed net profit 2.

7 billion (+ 42% YoY).

0%), exceeding market expectations.

Of which 19Q2 achieved income 16.

320,000 yuan (+19 compared with the same period last year).

9%), net profit attributable to mother 1.

510,000 yuan (+49 compared with the same period last year).

7%).

  19H1 realized net operating cash flow7.

3.5 billion (VS 18H1-3).

US $ 0.5 billion. Due to the increase in the payment received in 19H1 and the increase in wood pulp inventory in 18H1, the operating cash flow improved significantly.

  Benefiting from the decline in policies and wood pulp, Q2’s profitability has increased significantly.

Since April 19, the preferential policies have been implemented, and the company has basically benefited from 3 interest rate discounts.

In the second quarter of 19, pulp prices continued to increase gross profit margin. Since 4 months, pulp prices have continued to increase by 20% from 5,500 yuan / ton to 4,400 yuan / ton. The tax rate has been increased alternately.Gross profit margin continued to increase in the second quarter4.

85 points to 39.

2%, a record high; net margin increased by 0.

93 points to 8.

66%, also at an historical high.

  Channels and products are driven by two wheels to ensure long-term stable growth.

In terms of channels, the four major channels of GT, KA, AFH, and EC worked together to integrate the comprehensive sales network and accelerate the coverage of blank areas.

Relying on distributor channels to accelerate the coverage of blank areas, e-commerce, key stores, and commercial sales channels work together to strengthen consumers’ availability of the company’s products, will support the company’s smooth conversion of production capacity to sales, and add new mothers and babies at the end of 2018And new retail channels.

In terms of products, positioning in the mid-to-high-end market, focusing on differentiation, relying on the “Jierou” and “Sun” tissue paper brands, face, lotion, and natural wood. The three major series have continued to increase; among them, cotton wipes were introduced in 18 years and 19 years.In June, launched the “Dorei Honey” brand to expand its layout in the field of personal care products.

  The nationwide production capacity was expanded, and new projects for integration of bamboo pulp and paper were promoted.

The company relies on its subsidiary Jiangmen Zhongshun, Yunfu Zhongshun, Sichuan Zhongshun, Zhejiang Zhongshun, Hubei Zhongshun and Tangshan Branches to form a comprehensive production layout in East China, South China, West China, North China and Central China.

Recently, 30 first bamboo pulp and paper integration projects were constructed in Sichuan, of which 31.

8 initial bamboo pulp + 30 initial living paper, total investment 40.

USD 8.7 billion, the bamboo pulp paper integration project will increase the pulp self-sufficiency rate, reduce the changes brought about by raw materials and exchanges, while extending the industrial chain layout and further enhancing long-term profitability.

  The company has sufficient incentives and plans to carry out share buybacks for employee stock ownership plans.

In July 19th, it was planned to implement the second phase of employee stock ownership plan, and the transferee purchased 1,170 for 18 years.

960,000 shares (price is 8.

08 yuan / share); In December 18, the implementation of the equity incentive plan covered 4,618 companies.

In addition, the first phase of the 17-year employee stock purchase program was 1,665.310,000 shares (2 of total equity).

2%), core leaders Deng Guanjie, Deng Guanbiao, Liu Jinfeng and Zhou Qichao subscribed for 66% of the total share, and 5 other core members subscribed for 34% of the total share.

In addition, in April 19, the company announced plans to implement share repurchases. The total amount of repurchase funds was US $ 400-400 million, which was used for employee shareholding plans. The maximum price of repurchased shares was 18.

81 yuan / share, has not yet begun implementation.

The company has strong incentives for the core management team, which is conducive to the company’s long-term development in the future.

  Relying on the high-end / differentiation of products and the advantages of channel management, the company fully inspires the core team and impacts the sales target of 10 billion yuan.

Increased 19/20/21 profit forecast to net profit attributable to mothers are 6 respectively.

3.1 billion / 8.

10 billion / 8.

9.5 billion (average 5 before 19/20).

06 billion / 6.

1.1 billion), corresponding to PE 28.

15X / 22.

18X / 19.

83 maintain “Buy” rating!

  Risk reminder: the price of raw materials rises sharply, market competition intensifies, and channel expansion is not smooth

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