Baicao flavor continued to grow rapidly in 2019, and the main business of the headquarters was continuously adjusted and optimized. The company plans to sell baicao flavor, which is currently being promoted. After completion, the company will have sufficient capital. In the future, it is hoped that it will continue to optimize its main business while seeking health product layout opportunities to help expand the health food sector.
2019 Annual Report and 2020 Quarterly Report. In 2019, the company achieved revenue of 5.961 billion yuan, an increase of 20.4%, net profit of 193 million yuan, an increase of 48.7% over the previous year, after deducting non-net profit of 39 million yuan, a decrease of 57.5%. Of these, 2019Q4 was +38.4%/+184%/-528%, respectively. 2020Q1 achieved revenue of 1,774 million yuan, a decrease of 7.7%, net profit of 29.17 million yuan, a decrease of 78%, after deducting non-net profit of 30.71 million yuan, a decrease of 70%.
Revenue analysis: Baicao flavor continued to rise in 2019, and the main business continued to adjust. Baicaowei continued its high growth trend in 2019, achieving revenue of 5.023 billion yuan, a year-on-year increase of 29.2%. Among them, 2019 Q4 increased by about 50%, which is outstanding. I hope your headquarters continued to adjust. In 2019, revenue was 938 million yuan, down 11.6% from the same period last year, with Q4 falling about 6% year on year. Looking at specific categories, in 2019, nuts/dried fruits/preserved seafood achieved revenue of 25.75/8.21/762 million yuan respectively, an increase of 18.8%/37.4%/34.2% respectively. Red date products were still in the adjustment stage, achieving revenue of 735 million yuan and a decrease of 15.3%. Looking at large products, daily sales of nuts and Qingfei exceeded 400 million yuan and 70 million yuan respectively. Looking at different channels, benefiting from Baicao's continued high growth in 2019, the company's online channel achieved revenue of 5.160 billion yuan, an increase of 26.7%, of which B2C/inbound sales were +52%/-15%, respectively; offline channels achieved revenue of 802 million yuan, a decrease of 8.6%, of which the central China region achieved revenue of 400 million yuan, a decrease of 11.2%. At the same time, Baicao Wei strengthened offline expansion and opened 10 stores.
Profit analysis: Decrease in gross margin & increase in sales expenses ratio. Investment income drives profit increase. In 2019, the company's gross margin fell 0.9 PCT to 27.6% year-on-year, mainly due to ① the improvement in product quality in the company's headquarter's jujube business, which led to a decrease of 5.9 pcts to 33.2%; ② the share of the low-gross margin baicao business increased by 0.8 PCT to 26.5% in 2019. The sales expense ratio increased by 0.8PCT to 21.5%, mainly due to the rapid development of the baicao business, which led to an increase in the transportation cost rate and business promotion rate of 0.9/0.8PCT, respectively; the management expense ratio decreased by 0.5PCT to 3.2% year-on-year. In addition, the company's net investment income increased by 91.45 million yuan over the same period last year, mainly due to the subsidiary's re-accounting of the remaining shares and the increase in bank financial management income after increasing the capital and expanding the stock; the actual tax rate fell 8.6 pCTs to 20.1% year on year, mainly due to deferred income tax adjustments. As a result, the company's net interest rate increased 0.6PCT to 3.2% year-on-year in 2019.
2020Q1: The pandemic has dragged down online and offline sales, and short-term profits are under pressure. The revenue of the 2020Q1 company fell 7.7% year on year, mainly due to delays in the company's overall resumption of work and production under the COVID-19 pandemic, the closure of offline stores, and the impact of online sales on logistics and distribution. In terms of profit, offline store closures due to the pandemic, increased online competition, and rigid expenses led to a decline in profitability in 2020/Q1. Among them, gross margin fell 3.8 pcts to 27.6% year on year, and sales expense ratio increased 1.9 pcts to 21.1% year on year. In addition, other revenue decreased by 35 million yuan year over year, mainly due to a decrease in government subsidies; non-operating expenses increased by 5 million yuan year over year, mainly due to the company's increased foreign donations during the pandemic. As a result, the company's net interest rate fell 5.3 PCTs to 1.6% in 2020 Q1.
Risk factors: Market expansion falls short of expectations; increased industry competition; food safety risks.
Investment advice: Considering the impact of the domestic epidemic, adjust the company's 2020/2021 EPS forecast to 0.27/0.32 yuan (originally 0.41/0.48 yuan), add the 2022 EPS forecast of 0.37 yuan, and maintain the “buy” rating.
