Zhongshun Jierou (002511) Interim Report comment: steady revenue growth, performance elasticity released as scheduled

Zhongshun Jierou (002511) Interim Report comment: steady revenue growth, performance elasticity released as scheduled

Key points of the report Event description Zhongshun Jierou released the semi-annual report, and the company achieved revenue 31 in 2019H1.

7.2 billion, an increase of 22.

67%, net profit attributable to mothers2.

7.5 billion, an increase of 37.

59%, deducting non-net profit 2.

70 trillion, an increase of 41.

95%; single Q2 revenue of 16.

32 trillion, with an increase of 19.

88%, net profit attributable to mothers1.

5.1 billion yuan, an increase of 49.

66%, deducting non-net profit1.

480,000 yuan, an increase of 50.

13%; Overall, the company will repurchase the maximum price of shares from 13.

69 yuan / share is raised to 18.

81 yuan / share, the number of shares repurchased was adjusted to 1063.


530,000 shares, accounting for 0 of the total share capital.

81% -1.


  Event comment income was in line with expectations, and channel diversification continued to advance.

In 2019H1, the company’s revenue increased by 23% to 31 in ten years.

720,000 yuan, of which, single Q2 income continued to grow steadily, with a 20% increase to 16.

3.2 billion, revenue growth in line with expectations.

In terms of different channels, in the first half of the year, the company spent on major e-commerce platforms, and strengthened the optimization of the e-commerce supply chain and management team configuration. At the same time, it set up a dedicated service team for the sales group. It is expected that the company will use the e-commerce and sales channels in the first half of the year.Or achieve rapid growth.

As for the distribution channel, the growth rate or stability has been maintained along with the gradual transition of the blank market. In terms of emerging channels, the company opened mother-to-child and new retail channel construction in the first half of the year. Although it is still in the cultivation period of alternative channels, it will gradually accompany the maturity of the channel structure or graduallyContribute income increase.

In terms of products, in the first half of the year, the company focused on promoting the full distribution of emulsion products, increasing the share of key products such as facials, emulsions, and natural wood in various channels. At the same time, the company also gradually cultivated new categories, such as cotton towels and personal care.Products, with the maturity of categories, are expected to open up room for growth.

  The elasticity of profit was released, and the performance was beautiful as scheduled.

In the first half of the year, the company’s net profit attributable to the mother increased by 37 each year.

59% to 2.

USD 7.5 billion, the growth rate in the second quarter alone increased by 50% to 1.

5.1 billion.

The company’s second-quarter profit growth accelerated due to: 1) the price of raw materials continued to decline, the average price of coniferous pulp / broadleaf pulp per ton in the second quarter was 676/654 US dollars, which gradually decreased 24% / 18%; 2) from April 1Increasing the reduction of the tax rate will positively contribute to the company’s profits; 3) The proportion of high-gross non-roll paper products (such as face, lotion, natural wood) will increase.

As a rigidly needed consumer product, consumers are not very sensitive to price, and the current industry competition is in a good pattern, especially in the high-end category, there has not yet been a clear price war. With the cost falling and gradually falling, the company’s profit margin has entered the upward range.In the second quarter alone, the company’s gross margin / net margin increased by ten years.

85pct / 1.

84pct to 38.

23% / 9.


From the expense side, the company’s sales expense ratio / management and R & D expense ratio / financial expense ratio moved +3 in the second quarter.58pct / + 0.

79 points / -0.

72pct; Among them, the increase in sales expense ratio, we judge or mainly because the profit improvement background, the company appropriately increased product marketing expenses; At the same time, the company’s expansion of new channels (maternal and infant / new retail stores) also increased sales expenses; management expensesThe rate improvement may mainly benefit from the optimization of production and operation efficiency.

From the cash flow side, the company’s cash flow improved significantly in the first half of the year, and the net operating cash flow increased by 341% to 7 per year.

At 3.5 billion US dollars, we judge that under the current pressure of the prosperity of the pulp market, the downstream paper companies’ bargaining power has greatly improved, or the payment cycle has been lengthened.At the same time, the company’s purchase of raw materials increased during the same period last year, so the net cash flow base was low.

Looking into the second half of the year, it is expected that global pulp prices may have little room for upward growth. At the same time, the market competition pattern has not yet shown a clear trend, and it is optimistic that the company’s profit elasticity can continue.

  The expansion of production capacity will help complement categories and expand the bamboo pulp category to expand its growth space.

The company plans to build an annual output of 31 in Dazhou, Sichuan.

8 initial bamboo pulp and 30 initial living paper production capacity. The project is expected to have a total construction period of 70 months and a total investment of 40.

After the completion of construction, the company is expected to realize an annual income (including tax) of 30.

30,000 yuan, annual profit after tax2.

1.7 billion.

In terms of location, the company is located in Dazhou, Sichuan, which is backed by abundant bamboo forest resources. The area of bamboo forest available in the local area reaches 400,000 acres (2018 data), which supports normal production without worry. At the same time, the plant area has expanded to Dazhou Port, which is the fifth largest in SichuanPorts, freights of 500 tons, 4 berths of freight terminals, total length of passenger and cargo shoreline is more than 300 meters. In the future, while the production base will cover the needs of the southwestern region, it can also use the Yangtze River Channel to supply East China and Central China regions at transportation costs.

Policy: According to the “Bamboo Industry Development Plan of Sichuan Province”, the reconstruction (expansion) of the qualified bamboo pulp and paper deep processing production line will be divided into provincial key project plans, and strive to achieve the regional bamboo industry’s comprehensive output value and per capita bamboo in 2018-2022The goal of 杭州桑拿 doubling industry income and Jierou’s layout of the local bamboo pulp industry may benefit from regional policy dividends.

Considering that the company’s initial products (face, lotion, natural wood) are all wood pulp paper products, focusing on the high-end market, we judge that the new category added in this round is bamboo pulp paper products, and the “Sun” brand is launched, mainly in the mid-endFocusing on the market or readjusting the online entry, it is expected to form a synergy with the initialization categories and brands in the future, broadening the company’s development space in the field of tissue paper.

  Zhongshun is the leader of A-share scarce tissue paper. Under the current background of pulp prices falling and overlapping industries, competition distribution tends to benign background, the company’s profit may enter the improvement range.

At the same time, the tax reform is also conducive to the growth of the income scale of the tissue industry.

In the future, as the company’s supply and marketing network accelerates the layout of its product structure and upgrades its categories, the performance is expected to maintain steady and rapid growth. We expect the company’s EPS in 2019-2021 to be 0.



RMB 74, corresponding to PE of 29/22 / 18X. Industry experience shows that at this stage the company is expected to continue to enjoy the predicted premium. At present, the equity incentives covering most of the company’s employees are gradually coming to fruition, and people’s hearts have also accelerated the breakdown of various channels. The company raised its share repurchase.The price shows confidence and continues to “Buy” rating.

  Risk Warning: 1.

New capacity expansion was less than expected; 2.

The company’s core marketing team lost a large number of employees, reducing the competitiveness of terminal marketing.