Depth-Company-Pien Tsai Chuen (600436): The performance growth rate is slightly lower than expected Expected Insights into the reasons behind previous expectations

Depth * Company * Pien Tsai Chuan (600436): The performance growth rate is slightly lower than expected Expected perspective behind the reasons behind “previous expectations”

The company achieved operating income in the Q1 2019 reporting year14.

8.4 billion (+21.

45%), net profit attributable to mother 杭州桑拿论坛 4.

0.4 billion (+23.

99%), net of non-attributed net profit4.

3.0 billion (+24.

57%), operating net cash flow4.

9.9 billion (+106.

62%), performance growth was slightly lower than expected.

The price of main raw materials of the company’s core products has risen. We estimate that the company will actively control sales. It is expected that the price of products will increase in the second half of the year and maintain a “buy” rating.

Key points of official ratings What is the reason for the rapid growth of the quarterly report?

In Q1 2019, the growth rate of the company’s operating income, net profit attributable to mothers, and net profit attributable to non-mothers was 21 respectively.

45%, 23.

99%, 24.

57%, the parent company realized operating income6.

49 ppm, an increase of 15 in ten years.

89% (the parent company’s income is basically Pianzai tincture tablet income), which are lower than the market’s 30% growth expectations.

If only from a data perspective, most people may think that the company’s quarterly report exceeded expectations.

However, we have noticed that since the second half of 2017, the price of bezoar, an important raw material of Pien Tze Huang, has increased significantly. At the price of Anguo Pharmaceutical, the price of natural biliary yellow remained at 17 before September 2016.

50,000 / kg, since October 2016, the price has risen along the way, the current market price of natural bezoar biliary yellow is 390,000-400,000 / kg, due to tight supply, the price may increase further, the price of musk is stable at 450,000 / kg.
Rising raw material costs drive price increases is inevitable. In the case of the absolute value of the sales expenses disclosed in the annual report, Pianzai’s revenue maintained a 30% increase, showing its strong brand influence in the terminal and consumer recognition, and both volume and price rose.The logic holds.

The company’s last price increase was in May 2017. Combined with the company’s historical price increase cycle, we believe that the second half of the year is likely to enter the price increase cycle. We believe that the rapid growth of the performance of the quarterly report is a high probability of the company’s initiative to control sales.The overall growth of 30% can still be expected.

Financial indicators are sound, and reserves of precious raw materials in inventory have increased.

The company’s overall gross profit margin is 46.

05%, 0 per year.

44pc; net sales margin 27.

75%, an increase of 1 each year.

At 11 points, the profitability of the core variety Pien Tze Huang is still outstanding. Based on the core company’s parent company’s statement, the gross profit margin of the Pien Tze Huang series is about 80% and the net profit is about 60%.

The period expense rate is 12.

77%, the three expense ratios are basically the same as last year.

The company’s net inventory is 17.

55 ppm, an increase of 34 per year.

68%, it is said that the proportion of expensive and fine raw materials exceeds 60%, which guarantees the supply of raw materials for continued growth of Pien Tze Huang

The significant increase in the company’s operating net cash flow is the highlight, with operating net cash flow4.

9.9 billion (more than net profit) 4.

40,000 yuan), an increase of 106 in ten years.
62%, the growth is definitely due to the maturity of some of the parent company’s time deposits, which are listed on the cash flow statement as cash and cash equivalents.

It is estimated that we expect to achieve a net profit of 14 in 2019-2021.
9.1 billion, 19.

9.9 billion, 26.

23 trillion, maintain BUY rating.

The main risks faced by the ratings The sales of Pianzai, the core variety, did not meet expectations; the expansion of the experience store model was gradually expected; the price of raw materials increased significantly.