Performance Overview:
China Food released its annual results for 2019 on March 24. During the reporting period, the company achieved operating income of 17.172 billion yuan, an increase of 9.7% over the same period last year, and a net profit of 418 million yuan, an increase of 30.2% over the same period last year.
Performance comments:
The soda business grew steadily, and the aquatic products and other beverages grew faster. The soda business achieved 12.621 billion yuan in revenue for the whole year, an increase of 10.4% over the same period last year. The company actively laid out the "sugar-free" and "fiber +" series, continued to introduce new flavors and new packaging, and increased the soda sales share of 0.6pct (the overall market share exceeded 60%). In addition, the performance of aquatic products and other types of beverages is particularly beautiful, achieving higher growth: the operating income of aquatic products reached 1.508 billion yuan, an increase of 14.3% over the same period last year, the proportion of middle and high-end water further increased, and 2 yuan of water Chunyue achieved rapid growth. Other categories (such as energy drinks, instant tea, ready-to-drink coffee, etc.) achieved business income of 774 million yuan, an increase of 19.9% over the same period last year.
Cost reduction and product structure optimization promote the increase of gross profit margin, and the profit of 19H2 is faster than the previous month. In 2019, the company achieved a gross profit margin of 36.5%, a year-on-year + 1.1pct. On the one hand, the company locks the price of raw materials half a year ahead of schedule, and the continuous decline in PET prices since April is reflected in the company's costs in the second half of the year; at the same time, the company continues to optimize its product structure and promote the improvement of gross profit margin. Over the past 19 years, the company has continued to expand channels (establishing catering team and developing e-commerce channels), while strengthening brand investment, and the 19-year sales expense rate has increased to 29.0% compared with the same period last year. Taken together, driven by the gross margin, the full-year net profit rate is + 0.8pct.
Actively combing the channel system under the epidemic, with the improvement of the trend, the company's sales will gradually improve. From the perspective of the company's channel structure, catering, cinemas, schools, tourism and other scenes are mainly affected (the total revenue is expected to account for nearly 30%), while there is still an increase online, but on the whole, it still has a certain impact on the company's sales. In this case, the company actively combs the channel system, further refines, and maintains close contact with distributors. as of late March, more than 95% of the dealers have resumed work, and we expect that with the gradual improvement of the epidemic situation, the sales end of the company will gradually improve, and single-digit growth is still expected for the whole year.
Profit Forecast:
It is estimated that the company's revenue from 2020 to 2022 will be RMB 2.876 billion, respectively, with a year-on-year increase of + 6.5%, 13.6%, 9.0%, and net profit of 5.0, 61.0, 000, respectively, and the corresponding PE is 13X/11X/9X, respectively, maintaining the "Buy" rating.
Risk Tips:
Declining industry demand / lower-than-expected growth of new products / excessive duration of the epidemic / food safety issues.