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Bairun Co. (002568): Xinweijiu drives the pre-mix business to continue upward

22/03/2020

Bairun Co. (002568): Xinweijiu drives the pre-mix business to continue upward
1H19 results exceeded market expectations The company announced 1H19 results, revenue 6.3.6 billion, an increase of 14.4% (including pre-mixed wine income of 5.500,000 yuan, an increase of 22.3%), net profit attributable to mother 1.3.7 billion, an increase of 73.7%, corresponding to EPS 0.26 yuan.Earnings exceeded market expectations, mainly due to the equally outstanding performance of pre-mixed wine revenue and gross profit margin.In the first half of the year, the gross profit margin of the pre-mix business increased by 0.29ppt, the main cause of scale effect began to manifest.Flavor and fragrance income in the first half of the first half of the year 19.4%, mainly due to the impact of downstream order rhythm switching, we believe that the long-term stable growth trend has not changed. Development 南京夜网 Trends We expect Accelerate revenue growth of 65% to 4 in 2019.700 million US dollars, the previous slowdown due to the gradual increase in scale, resulting in the company’s pre-mix business increased by 21%.As a new single product of the company’s growth, Xinweihuan has a lot of adaptability to taste and higher enjoyment after repeated upgrades and iterations. The target consumer group is significantly larger than before and the repurchase rate is higher.Xinwei’s expansion in the channel is gradual and gradual. We estimate that the current rate of distribution in the RIO sales channel is only about 40%, and there is room for continued improvement.The company attaches great importance to the incubation and repurchase rate indicators of Xinwei, adopts key cultivation strategies in key markets, advances in a rolling manner, and does not blindly pursue rapid increase. Channel thrust began to re-release.2015?After a round of deep contraction adjustment in the company’s channel in 18 years, the current channel system is basically stable, and it has started to expand and sink flexibly. Inventories and profits of dealers and terminals have improved significantly compared to before. Manufacturers’ personnel and marketing support costs can be reached, and channel thrust has begun to be released again. The company continues to strengthen product launches and iterations to recharge for long-term development.In the first half of the year, research and development expenses increased by 40% to 33.72 million yuan, mainly due to investment in taste recipes and reserve products. The 8-degree strong cool launched in 2017, after continuous iteration, presents a preliminary trend of heavy volume. Earnings forecast and estimate As the pre-mix business is better than our expectation, we raise EPS 4 for 2019/20.6% / 4.6% to 0.55/0.69 yuan, so raise the target price of 5.6% to 20.6 yuan, corresponding to 37 / 30x P / E in 2019/20, the current price corresponds to 33 / 27x P / E in 2019/20, and the target price has 12% growth space, maintaining the outperform industry rating. Risks If sales expenses are excessively compressed, revenues may fall short of expectations.