Main points of investment:
Soy sauce maintained steady growth, and the strategic effect of large single product was gradually revealed in 2014, the company launched a large single product strategy. In the first three quarters of 2016, the company's revenue increased by 5.1% compared with the same period last year, of which noodle fresh revenue increased by more than 20%. We expect to achieve revenue of about 200 million for the whole year, indicating that the large single product strategy has achieved certain results. In the future, with the establishment of the KA market in first-and second-tier cities, another core product of the company, "original brewing", is also expected to achieve rapid growth.
By the end of 2015, the company's new production base in Changsha was officially completed, while the old production base in Changsha was closed. The total soy sauce production capacity of the company increased from 200000 tons to 280000 tons (including 200000 tons in the new factory and 80,000 tons in the old factory in Zhengzhou), and the soy sauce production capacity constraints were gradually eliminated. At present, the operation of the new production base is in line with expectations and has completely replaced the old production base in Changsha; at the same time, all the new production bases adopt Japanese-style fermentation technology, which promotes the improvement of the quality of the company's soy sauce products. it also helps the company to expand the proportion of middle and high-end products in the product structure.
The company is gradually increasing investment in KA channels, which is expected to add new impetus for performance growth. At present, the company's products are still mainly sold through circulation channels, and the proportion of KA and catering channels is very low.
In recent years, the company pays more and more attention to KA channel, taking KA channel as the key breakthrough direction. As early as the end of 2014, the company established the KA Division to be responsible for the development of KA channels. The company originally intended to rely on the original dealers to develop KA channels, but because the original dealers have been operating circulation channels in the past and lack of experience in KA channels, the initial development of KA channels is relatively slow. This year, the company is expected to learn from experience and invest more resources in the construction of dealer team in KA channel, and strengthen the management of KA dealers by changing the assessment mechanism. We believe that if the company can be more active in building and motivating the dealer team, the KA channel is expected to add new impetus to the company's performance growth.
Profit forecast and investment rating: maintain the buy rating forecast that the EPS for 2016-17-18 will be 0.14x0.17x0.20 respectively, corresponding to the PE of 47.90 / 40.17Universe 34.35 times for 2016-17-18, maintaining the "overweight" rating of the company.
Risk hint: raw material price fluctuation risk, market expansion is not as expected
