Qianhe Flavor Industry (603027): Regional Expansion Accelerates Company’s Revenue Expected to Continue Stable Growth

Qianhe Flavor Industry (603027): Regional Expansion Accelerates Company’s Revenue Expected to Continue Stable Growth

Core point of view: The company’s regional expansion is accelerating, and the condiment revenue continues to grow rapidly. The company’s 2019H1 revenue5.

0.94 million yuan, an increase of 24 in ten years.

07%; single second quarter revenue 3.

30,000 yuan, an increase of 29 in ten years.

96%, accelerated growth from the previous month, slightly exceeding market expectations.

The company’s 2019H1 condiment revenue increased by more than 30%, mainly benefiting from the following three aspects: (1) the company’s investment promotion efforts increased, and regional expansion accelerated.

The number of H1 company dealers in 2019 reached 932, an increase of 84 from the end of 2018, an increase of 10%.

(2) Since the beginning of 2019, the company has trained channel expertise and strengthened performance appraisal of marketing personnel and quarterly appraisal of dealers. The enthusiasm of dealers and sales teams has increased.

(3) 2018H1 has a small income base.

In terms of different regions, the condiment revenue in the southwest market of the 2019 H1 base camp increased by 16%, and the growth rate was steady; the condiment revenue in the two major foreign port markets, East China and North China, increased by 64% and 96%.

The company deducted non-net profit for the first half of the year.

80 ppm, an increase of 34 in ten years.

35%; non-net profit deduction of 0 in the second quarter

350,000 yuan, an increase of 61 in ten years.


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

The gross profit margin of the company in Q2 2019 was 45.

03%, an increase of 1 compared with 2018Q2.

52pct mainly benefits from the following three aspects: (1) The high growth of the external port market has promoted the continuous upgrade of the product structure.

(2) The increase in the proportion of condiment revenue has 南宁桑拿 contributed to the increase in overall gross profit margin.

(3) Product structure upgrade in the southwest base camp area.

The sales expense ratio of the company in Q2 2019 was 24.

32%, up 4 by the second quarter of 2018.

17 points, mainly due to employee compensation, promotion and promotion expenses and miscellaneous expenses increased; management expense ratio 4.

17%, down 3 from the second quarter of 2018.

42pct, mainly due to the reduction of equity-settled share-based payment recognition expenses.

The company continues to expand channels and actively deploys balsamic vinegar production capacity. The revenue is expected to grow steadily in the next two years. It is an important development period for the company. The company will accelerate the nationwide deployment and plan for the zero-added area in advance. We expect the company’s revenue to increase by more than 20% in 2019.Revenue strives to grow by about 30%.

(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) In terms of products, zero-addition is the core of the strategy. The company will continue to invest resources to nurture consumers, and launch high-fresh products (Ding Ding Xian, Extremely Taste Fresh, High Fresh 135 and Yipin Xian) to enjoy the industry growth dividend and promoteProduct volume.

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.

1% / 26.

2% / 20.

6% (In March 2018, 100% of the distribution of Meishan Dadi Longsheng E-commerce Co., Ltd., a wholly-owned subsidiary, was transferred and the transfer income was 0.6.9 billion yuan.

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

7%); EPS is 0.



71 yuan / share; the current estimated PE value is 44/35/29 times.

The average PE of the condiment industry in 2019 is estimated to be 51 times.

The company ‘s channel expansion period has stronger growth. We give it a 50x PE estimate for 2019, corresponding to a reasonable value of 24 yuan / share, and maintain an overweight rating.

Risk warning: Channel expansion is less than expected, food safety issues.