Qianhe Flavor Industry (603027): National Expansion Accelerates Revenue Expected to Continue Steady Growth

Qianhe Flavor Industry (603027): National Expansion Accelerates Revenue Expected to Continue Steady Growth

The company’s regional expansion accelerated, and the soy sauce revenue in 2019Q1 grew rapidly.

91 trillion, with an increase of 18.

46%, in line with market expectations.

2019Q1 company soy sauce income1.

7.4 billion, accounting for 70% + of condiments, an increase of 32.

23%; vinegar income is 0.

4.5 billion, an increase of 7.

69%.

The high growth of soy sauce revenue in 2019Q1 mainly benefited from the following three aspects: (1) The company’s investment promotion efforts increased and regional expansion accelerated.

The number of company dealers in Q1 2019 reached 887, an increase of 39 from the end of 2018.

(2) The company’s channel professional skills training, and strengthened the performance evaluation of marketing personnel, the enthusiasm of dealers and sales teams increased.

(3) The revenue base in the first quarter of 2018 was small.

Revenue of the company’s southwest base camp in Q1 20191.

47 trillion, the same increase of 6.

23%; East China and North China market revenues of the two major foreign port markets are 0.

45, 0.

26 trillion, an increase of 35.

47%, 103.

53%.

The company’s 2019Q1 net profit was 0.

51 ppm, a decrease of 54 per year.

05%; deduct non-net profit 0.

46 trillion, with an increase of 19.

07%.

The decrease in the company’s net profit in Q1 2019 was mainly due to the high base in Q1 2018-the transfer of 100% of the wholly-owned subsidiary to obtain a transfer income of 0.

6.9 billion yuan.

The growth rate of the company’s non-net profit was higher than the growth rate of revenue, mainly due to the increase in gross profit margin.

2019Q1 company gross profit margin 48.

26%, an increase of 4 before the first quarter of 2018.

The 55 PCTs mainly benefit from the following three aspects: (1) The high growth of the foreign port market promotes the continuous upgrade of the product structure.

(2) The company’s condiment gross margin is 50% +, the caramel-colored gross margin is 25%, and the increase in the proportion of condiments drives the overall gross margin to increase.

(3) Product structure upgrade in Southwest China.

The sales expense ratio of the company in Q1 2019 increased by 3 compared with Q1 2018.

The 98 PCTs were mainly due to the increase in sales staff salaries and transportation expenses.

Benefiting from channel expansion, revenue growth in 2019 is expected to increase by 20% + the next two years will be an important period for the company’s development. The company will accelerate the nationwide distribution and grab consumers’ minds. We expect the company’s revenue to increase by more than 20% in 2019.

(1) According to the company’s annual report, the company will continue to attract investment to explore the national market and continue to improve the marketing capabilities of modern and traditional channels.

(2) The company has established a brand department to be responsible for the planning and implementation of brand building. It is expected that this year it will expand advertising and increase brand influence.

(3) The company trains channel professional skills, and separately establishes an operation department to strengthen the performance evaluation of marketing personnel.(4) From the perspective of products, zero-added is 四川耍耍网 the core of the strategy, and the company will continue to invest resources to cultivate consumers.

In addition, the company introduced high-fresh products to enjoy industry growth dividends and promote product volume.

We expect that the company’s national market layout is expected to continue to advance-the improvement of the national commercial supermarket channel will further sink to provincial capitals, prefecture-level cities and even top 100 counties, and the traditional channel layout will be strengthened.

And benefit from the increase in performance evaluation, the company’s sales team and dealers are expected to increase enthusiasm.

Earnings forecast We expect the company’s revenue to increase by 23 from 2019-2021.

1% / 19.

7% / 14.

9%; net profit increased by -10.

5% / 25.

8% / 20.

7% (Excluding the impact of transfer income, net profit in 2019 increased by 25.

7%); EPS is 0.

66/0.

83/1.

00 yuan / share; the current estimated PE value is 37/29/24 times.

The company’s performance in the next three years is expected to continue to grow steadily.

The average PE in the condiment industry in 2019 is estimated to be about 40 times. We give the company a 38 times PE estimate in 2019, corresponding to a reasonable value of 25 yuan per share, and maintain an overweight rating.

Risk reminders: (1) food safety issues; (2) the company’s channel expansion is less than expected: the business supermarket, the traditional channel expansion progress is less than expected.