Zhongshun Jierou (002511): 3Q deduction of non-net profit increased by 62%. Focus on costs, channels, and incentives for sustainable growth.

Zhongshun Jierou (002511): 3Q deduction of non-net profit increased by 62%. Focus on costs, channels, and incentives for sustainable growth.

The 1-3Q results are in line with our expectations of the company’s 1-3Q19 results: Revenue 48.

20,000 yuan, an increase of 18 in ten years.

1%; net profit attributable to mother 4.

3.8 billion, an annual increase of 40%; net profit after deducting non-attribution4.

26 ppm, an increase of 48 in ten years.

6%, in line with market expectations.

By quarter, 1Q-3Q revenues increased by 25 each.

8% / 19.

9% / 10.

2%, net profit attributable to mothers increased by 25.

2% / 49.

7% / 44.

2%, net profit after deducting non-attribution increased by 33.

1% / 50.

1% / 61.


Development Trends 1. Revenue growth from 1-3Q remained stable.

1-3Q company revenue increased by 18 in ten years.

1%, the overall remains stable, and the single 3Q revenue growth rate has improved. We expect the preliminary system to be: 1) the industry’s 3Q price competition has intensified under the background of falling raw material prices; 2) e-commerce channel revenue is affected by platform operation adjustments,Single quarter growth rate improved.

向后看,我们预计4Q 公司收入端在产品结构持续优化(Face\Lotion\自然木系列占比提升)、电商渠道一次性调整结束、采取更大力度的竞争策略等因素带动下,有望保持Steady growth.

2. The price of raw materials fell and profitability continued to rise.

The increase in gross profit margin in the first three quarters of 19 raised 3 ppt to 38.

3%, of which 1Q-3Q increased (decreased) -4.



2ppt,得益于:1)原材料价格持续下跌,1-9 月外盘针叶浆/阔叶浆均价分别同比下跌27%/23%;2)产品结构优化,定位更高的Face\Lotion\The proportion of natural wood series has increased; 3) The increase rate has decreased.

1-3Q sales expense ratio increased by 0.

8ppt, the company increased market investment; management + R & D expense ratio increased by 1.

1ppt is mainly due to the amortization of fair incentive expenses and the expansion of research and development. Under the comprehensive influence, the company’s net interest rate increased by 1.

4ppt to 9.


3. Focus on the sustainability of growth brought about by costs, channels and incentives.

In terms of cost, in October, 南京桑拿网 the average price of outer disk needle / broad-leaved pulp fluctuated at a low level of 580/463 US dollars / ton, and continued to pay attention to the contribution of the gradual trend of pulp prices to the elasticity of profit; in terms of channels, the company continued to be in e-commerce, commercial consumption, KA in 2019The GT channel is working hard to increase the refined operation of the channel and increase the proportion of high-end products. In terms of incentives, the company’s stock compensation and offset stock incentive plan issued by the company in 19 reached 3687 people, and the exercise (unlock) conditions are 2019-2021.Annual company revenue rankings increased by 41 in 2017.

6% / 67.

09% / 94.

03% (corresponding to revenue of 90 trillion in 2021), optimistic about the company’s steady growth momentum under wolf incentives.

Earnings Forecasts and Estimates We maintain our 2019/2020 earnings forecasts with 0.

46/0.55 yuan is unchanged.

The current total corresponds to a 30x / 25x P / E ratio for 2019/2020.

Maintain Outperform rating and 15.

The target price of 0 yuan corresponds to 33 times the 2019 price-earnings ratio and 27 2020 price-earnings ratio, which has 10% upside compared with the current one.

The prices of risky raw materials fluctuated sharply, and market competition intensified.