This report is read as follows:

Income declined in 2019, mainly due to a reduction in catering attendance. In the future, the company will promote iterative product upgrading and constantly optimize the product line, which will give new growth value to time-honored brands.

Main points of investment:

Maintain the overweight rating. Affected by the epidemic situation, the EPS from 2020 to 2022 was reduced by 0.07 yuan (- 0.22) / 0.22 (- 0.10) / 0.23 yuan. Epidemic factors do not affect the company's long-term profitability, considering that the company continues to invest in product research and development, manage quality upgrading, refer to the company's historical valuation center, give 2021 70.3xPE, maintain the target price of 15.46 yuan, and maintain the overweight rating.

Performance description: 2019 revenue of 1.566 billion /-11.87%, net profit of 44.6279 million /-38.90%, non-return net profit of 20.3023 million /-64.48%, basic earnings per share of 0.14 yuan, and 0.24 yuan for the same period in 2018. The performance is in line with expectations.

Negative growth in catering and commodity sales, and a decline in catering reception is a drag on performance growth. Catering business:

Affected by the intensification of competition in Chinese dinners, it received 6.5892 million guests /-14.48% in 2019, closed a total of 8 direct operations and joined stores due to management upgrading, with revenue of 1.104 billion /-13.51% and gross profit margin down 2.15% from the same period last year. Commodity sales: revenue 412 million /-8.76%, revenue share increased to 26.30%, gross profit margin rose 1.18% year-on-year. The company has formed prepackaged products represented by vacuum roast duck and flavored roast duck, ready-to-eat leisure products and daily staples characterized by duck crisp, Egg-Yolk Puff, etc., the sales profit of moon cakes in 2019 is much higher than that of the same period in 2018, and the company's product innovation is expected to continue in the future.

Short-term performance is under pressure, and long-term brand value is still there. Under the influence of the epidemic, the company's catering business suffered a phased impact, the company developed takeout business, multi-channel efforts to alleviate sales pressure. In addition, the company is committed to reshaping the brand image, promoting the upgrading of service quality, increasing the iterative upgrading of old products and the R & D and listing of new products, which is expected to quickly form a new revenue growth point.

Risk factors: the epidemic persisted for a long time, and the development of new products was not as expected.