3Q18 income meets CICC's expectations

Gujing tribute wine announced 1~3Q18 performance: income 6.76 billion yuan, with an increase of 26.5%, return to the mother net profit of 1.26 billion yuan, with an increase of 57.5%, corresponding to EPS 2.49 yuan. 3Q revenue growth rate of 18.3%, in line with CICC expectations, but lower than market expectations. The advance collection at the end of the third quarter was 1.11 billion yuan, an increase of 310 million yuan compared with the end of the second quarter, and an increase of 490 million yuan over the end of the third quarter of last year, indicating that the channel is more active in making payments.

Trend of development

The raw pulp continues to grow rapidly in the second high-end years, and we expect its income to grow by 72% in the past 18 years, with an increase of about 50% in 19 years. The core lies in the rapid upgrading of the level of public banquet liquor consumption in Anhui Province to 200,300 yuan, represented by Gu8 and Kouzi cellar for 10 years, with a growth rate of more than 60%. The secondary high-end income of Anhui Province in 17 years is about 2.7 billion yuan, accounting for only 11%. It is expected to reach the 17-year Jiangsu level in 2021, with a scale of about 10 billion yuan. Gujing as the leader of Huizhou wine brand quality and channel comprehensive advantages will continue to release, fully benefit from the rapid expansion of this price level.

The year raw pulp brand began to focus on promoting Gu 20 with a price of 500 yuan to 600 yuan, in order to further enhance its brand and quality advantages, which is conducive to volume at a higher price in the future. At the same time, investment promotion and consumer cultivation in key markets outside the province began to land, and the annual raw pulp was covered at a wide price of 100,800 yuan, which can basically meet the upgrading needs of local consumers.

We expect that the company has lowered its original aggressive revenue target, and its growth will be more robust, which is conducive to the sustained and healthy cultivation of the brand and the healthy development of the channel. The rate of bills receivable and channel promotion expenses increased significantly in the second quarter compared with the same period last year, and the quality of actual growth was not high, while the balance of bills receivable decreased significantly in the third quarter. Under the adjusted goal, the pressure on the current business personnel and channel operators has been greatly reduced.

Profits are still in a period of rapid release, with a growth rate of 30% over the next two years. Mainly from the high growth of sub-high-end products to pull up the gross profit margin, as well as the steady decline in the expense rate.

Profit forecast

The profit forecast is basically unchanged, with an EPS forecast of 3.32 million 4.39 yuan in 18max in 1919.

Valuation and suggestion

The company's current share price maintains the recommended rating for 18gamma 19-year 19/14xPE, but due to the downgrade of the valuation center, we lowered our 12-month target price from 127.6 yuan to 109.8 yuan, corresponding to 18gamble 19-year 33/25xPE, which has 76% room for the current share price.

Risk

If the economic growth of Anhui Province slows obviously, the growth of raw pulp in sub-high-end years may not meet expectations.