Alcoholic drink (000799): Interim report results in line with expectations

Alcoholic drink (000799): Interim report results in line with expectations
Event: The company released the 2019 semi-annual performance report, and achieved operating income in the first half of 20197.09 million yuan, an annual increase of 35.41%; net profit attributable to mothers1.56 ppm, an increase of 36 in ten years.34%.  Among them, 2019Q2 achieved revenue 3.63 ppm, +40 for ten years.49%, net profit attributable to mother 0.8.3 billion, +60 in ten years.63%.  High-end internal reference relays continued to increase the volume of high-end alcoholics, and revenue maintained rapid growth.The company achieved revenue 7 in the first half of 2019.Ten percent of 09, +35.41%; revenue in the second quarter of 20193.63 ppm, +40 for ten years.49%, the growth rate is in line with expectations.The rapid growth of the company’s revenue was mainly due to the rapid volume of high-end internal reference wines in the first half of the year.According to grassroots research, the internal reference in the first half of the year basically completed the results of last year, and based on this calculation, the internal reference H1 achieved revenue of about 2.400 million, 94 in the same period last year.On the basis of a high base of 13%, the excess growth still rose to more than 130%, indicating that the growth of high-end internal parameters is strong.In December 2018, the company established an internal reference wine sales company in which distributors take a stake, deeply binding the interests of large distributors. Internal reference wine maintained rapid growth under a flexible operating model, and it is expected that it will reach the average of last year most likely before 19 years ago.  With the growing maturity of internal reference wine sales companies and the increasing number of distributors, the internal reference wine will take over from the ghost wine to become a new engine for the company’s performance growth.  Fearless of short-term performance fluctuations, product structure upgrade expenses remain stable and the company’s profitability is guaranteed.The company achieved net profit attributable to mothers in the first half of 20191.56 trillion, +36 ten years ago.34%; In the second quarter of 2019, net profit attributable to mothers was zero.8.3 billion, +60 in ten years.63%, the growth rate is in line with expectations.The main reason why the company’s net profit attributable to mothers grew faster than expected in the first quarter of 2019 was because the company actively shaped its high-end image, its brand building shifted from the region to the country, and the sales expense ratio increased;Rebates, etc., led to a reduction in gross 南京夜网 profit margin3.27 points.We believe that Q2’s performance has increased rapidly, and the reduction is an indicator of the short-term impact of cost placement. However, in view of the extension of the size, the cost has remained stable as a whole.We believe that fee issuance will help the company achieve national brand expansion and lay a solid foundation for the rapid growth of future performance.It is expected that the overall cost and expenditure will not change in 19 years, and the offline channel expansion will be more accurate and efficient. With the rapid growth of the company’s revenue volume, the expense ratio will tend to decline, and the company’s profitability will also improve significantly.At the same time, the high increase in profits is due to the upgrading of product structure.According to estimates, the company’s participation ratio increased to 35% in the first half of the year, an increase of 14.41 points.The revenue share of high-end internal reference and sub-high-end alcoholics increased to 90%, and increased by 4pct by 2018.With the volume of internal reference and alcoholics, the company’s product structure will continue to be optimized, and gross and net profit margins will continue to improve.  Demand for high-end liquor is strong, channel expansion is accelerating, and we are optimistic about the company’s future performance growth.With the Maotai charcoal price standing at 2,000 yuan, and the successful implementation of the price increase strategy of Wuliangye and Luzhou Laojiao, the high-end liquor market has shown an upward trend and strong demand.Against this background, the company’s internal reference wine in the second quarter of the volume control and price increase strategy also smoothly implemented.We believe that the goal of doubling the internal reference three years each year will most likely be achieved.At the same time, the rise of external Moutai prices is also high-end, and the next high-end liquor will release space, and the company’s product structure will be further optimized, driving rapid growth in net profit.In terms of channels, the company further cultivated the base camp in Hunan to promote the transformation of the channels. The stores were sunk to the district and county levels, and the county-level market in Hunan province was basically covered.As the only listed liquor company in Hunan Province, the company has a high degree of local brand recognition, but the scale is still small. With the deepening of the province’s channels in the future, the company has potential in Hunan market.In addition, the company is expected to realize shareholders’ COFCO’s rich consumer product marketing experience to accelerate the nationwide layout and provide a broad space for sustainable performance growth.  Profit forecast: It is expected that the company will realize revenue in 2019-2021.60/19.80/22.30 ppm, an increase of 31 in ten years.42% / 26.93% / 12.63%, net profit attributable to mother 2.91/4.17/5.30,000 yuan, an increase of 30 in ten years.47% / 43.40% / 20.78%, corresponding EPS is 0.89/1.28/1.55 yuan.Taking into account the company’s internal volume, the company can still achieve high growth in the next 2-3, giving the company a 30-fold estimate, 12-month target price of 38 yuan, 53% upside, maintaining the company “strongly recommended” investment rating.  Risk warning: food safety risks, macroeconomic downside risks, product structure optimization is less than expected, etc.