Angie Yeast (600298) CICC Hong Kong Strategy Meeting Minutes： The trend is improving 19 years profit margins are on the horizon
Angie Yeast (600298) CICC Hong Kong Strategy Meeting Minutes: The trend is improving 19 years profit margins are on the horizon
Company NewsCompany StatusWe recently invited Angel Yeast to participate in the CICC Hong Kong Strategy Conference and had in-depth exchanges with investors.
We believe that 1Q19 may be a low point of expected profits. With the resumption of production at the Ili plant, the cost of molasses has dropped, product prices have risen and the structure has been upgraded, and profitability has recovered. Year-to-date, the company has faced significant stagnation in relative sectors and can focus on trading opportunities.
The comment maintains the highest 15% revenue indicator unchanged, and will rely more on price increases and structural upgrades in the future.
From the perspective of the driving factor of volume and price growth, the inclusion indicates that due to the delay in the construction of the second phase of the Russian factory, it is expected that no new production capacity will be put into operation by the end of 2020. The company will maintain tight production capacity in the next 1-2 years, and the sales growth will only depend on technological transformation.Promote the maximization of production capacity.
And the reliance on the increase in unit price and the optimization of the structure in the source of income growth will be better.
In the first quarter of 19th, the company has increased the price of yeast plant by 5% in the Russian factory 2. The company expects that other domestic and overseas products may replace and raise prices in the future. The company will also give priority to the supply of high-margin products to optimize the structure and upgrade.
In 19, the average price of molasses purchases was downgraded by 10% each year, which was better than expected.
In the 2018/19 season, the company’s molasses procurement costs fell by about 10%, exceeding the company’s initial estimates. Due to the incremental average calculation method of molasses purchases, molasses prices will improve every quarter in 2019, and will decrease by about 2-3%, less cost pressure in one year.
If the cost of molasses increases in 2020, the company is also expected to hedge the cost pressure through price increases.
Yili’s resumption of production and the devaluation of the RMB will also benefit margins.
We expect that 南京桑拿网 after the low base in 1Q19, the 2Q interest rate is expected to gradually recover. The growth rate of profit growth in 2019 is expected to exceed the income. This is because the company stated that the capacity utilization rate of Yili Company has increased to nearly 80% in 1Q19, and it is expected to resume full production during the year.The pressure on profits will be eased; the depreciation of the RMB will benefit export businesses and foreign exchange gains and losses; no new capacity will be built and put into operation in the next 1-2 years, and capital expenditures will be reduced. Depreciation and falling financial expense ratios will also benefit profit margins.
Estimates suggest maintaining the 19/20 EPS forecast1.
The 48 yuan is unchanged, and the current sustainable correspondence is 22/18 times P / E in 19/20, and the target price is maintained at 30.
8 yuan and neutral rating, target price corresponds to 19/20 25/21 times P / E, the current price is still 14% increase.
The company’s fundamentals have gradually improved. From the beginning to the present, the company’s mergers have seen a significant stagnation in relative sectors, so we can focus on trading opportunities.
Risks Yili plant restricts production, changes in RMB exchange rate, environmental protection costs increase, changes in raw material prices