Events:
On March 8, Sino-Portuguese shares released their 2013 annual report. From January to December 2013, the company's total operating income was 552 million yuan, down 10.81% from the same period last year, and the net profit belonging to shareholders of listed companies was 15.73 million yuan, up 58.07% from the same period last year.
Main points of investment:
Alcohol revenue increased by 9.56% compared with the same period last year, the cost rate increased to 67.52%, and the operating profit was-140 million. In 2013, the company's alcohol revenue was 435 million, up 9.56% from the same period last year, and its gross profit margin was 65.06%, 4.3% higher than in 12 years. In 2013, the output of the national wine industry-14.59%, revenue-9%, profit-20%; it is not easy for the company to achieve 9% revenue growth against the trend, so it has invested a lot of resources in the construction of the sales system, resulting in losses in the main industry.
The company's 13-year three-item expense rate increased by 14.5 percentage points to 67.52% compared with 12 years, including sales rate 34.07% (+ 8.18%), management expense rate 12.87% (+ 0.65%), and financial expense rate 20.58% (+ 5.68%). The high expense rate led to the company's 13-year operating profit of-142 million. Through the sale of real estate assets, the company contributes about 110 million in non-recurrent profit and loss, and deducts non-profit about-95 million yuan.
The construction of the marketing system and the reduction of financial costs will become an opportunity for the company to turn around.
The company announced on January 30th that it intends to increase no more than 449 million shares at a fixed rate of not less than 3.34 yuan per share and raise no more than 1.5 billion yuan, of which 450 million yuan will repay bank loans and 1.05 billion yuan to improve the marketing system. The increased focus of the company continues to expand its marketing system, and plans to build about 4000 marketing outlets (experience stores, specialty stores, counters, etc.) across the country. It is proposed to set up 7-8 large-scale warehousing and logistics centers and 25-30 small warehousing and logistics centers in northwest, north, east and southwest regions. In addition, additional funds to repay debt will also significantly reduce the company's currently high financial costs. We expect that the implementation of regular projects will push the company's revenue growth to a higher level on the one hand and reduce the expense rate on the other, resulting in a significant improvement in the company's profitability.
Key assumptions and investment recommendations:
Our key assumption for the following expectations is that the company's fixed increase financing plan will be successfully completed in 14 years, and will begin to implement the marketing network project of the fixed increase program and complete the repayment of bank debt in 14 years.
It is estimated that in 14 and 15 years, the company's operating income will grow by 14.0% and 35.0%, net profit by 458.2%, and net profit by 119.6%. EPS is 0.07 and 0.15 yuan. Considering the possibility of a rapid upward trend in the company's future profitability, the company is given a target price of 4.50 yuan (corresponding to 30 times PE in 15 years) with a "cautious recommendation" rating.
Risk hints: the fixed increase plan can not be promoted on time, the effect of channel construction is not as expected, and food safety problems
