Main points of investment
On August 25, Xi'an Food released its 2017 semi-annual report. During the reporting period, the company achieved operating income of 252 million yuan, up 0.37% from the same period last year. Net profit attributable to shareholders of listed companies / net profit attributable to shareholders of listed companies after deducting non-listed companies was 0.011 million yuan, a decrease of 105.22% / an increase of 71.03%. During the reporting period, the company's EPS was 0.00 yuan.
During the reporting period, the company's revenue was basically flat compared with the same period last year, and the return net profit decreased significantly compared with the same period last year, but the loss situation of deducting non-return net profit slowed down. The company's manufacturing business achieved revenue of 29 million yuan, an increase of 41.31% over the same period last year, while revenue of the catering service industry reached 166 million yuan, down 20.10% from the same period last year.
The decline in the company's net profit was mainly due to a decrease of 32 million yuan in subsidy income during the reporting period, a drop of more than 80 per cent compared with the same period last year. We are mainly concerned that the net profit of non-vested listed companies increased by 71.03% compared with the same period last year, indicating that the company's losses have narrowed or its operations have taken a turn for the better. The company's strategy of reducing staff and increasing efficiency has been effective, and the cost has declined as a whole during the period. During the reporting period, the company's sales expenses were 79 million yuan, down 0.54% from the same period last year; management expenses were 115 million yuan, down 28.28% from the same period last year. During the overall period, the overall gross profit margin of the company declined 1.41pct compared with the same period last year, and the gross profit margin of catering business decreased 3.85pct, while the gross profit margin of manufacturing business increased 0.51pct.
The company still has a strong regional influence, and continues to deepen the business competitive advantage. The company is the largest catering enterprise in Northwest China. During the reporting period, the company continued to open up the market, opening 12 large-bag chain outlets on May Day, and set up a cultural heritage and food R & D and innovation group with the increase in scale. Held more than 200 cultural marketing activities, and successively launched programs such as "Spring Festival dishes recommendation" and "Chef Home, delicious" in cooperation with Shaanxi TV Station, and set up the company's Wechat sales platform "IN Food Xi'an". The company's controlling shareholder is changed to overseas Chinese Town and is optimistic about the follow-up coordinated development. After the equity transfer, overseas Chinese Town Group has 21.04% of the voting rights of the company and becomes the actual controller of the company. The overseas Chinese Town itself has a variety of tourism resources and development and operation capabilities, receiving more than 33 million tourists in 2016, ranking fourth in the world. Its original project and company business are related to tourism and related industries, with synergistic effect.
Profit forecast and rating: at present, the company's internal management reform and food research and development have achieved initial results, which will maintain its geographical and resource advantages and strengthen the competitiveness of the original main business. At the same time, overseas Chinese Town, the controlling shareholder, will bring a new round of development opportunities for the company. We are optimistic about the improvement of the company's endogenous management and the development of its extension business. It is estimated that in 2017-19, the EPS will be 0.03, 0.05, and 0.08 yuan, maintaining the "overweight" rating.
Risk hint: competition in the catering industry has intensified, and the effect of cost-side control is not as good as expected.