Xiang Piaopiao (603711): Gradually evolve without changing the nature, optimistic about the scale expansion of instant tea drives profitability

Xiang Piaopiao (603711): Gradually evolve without changing the nature, optimistic about the scale expansion of instant tea drives profitability
Event: Xiang Piao Piao released its semi-annual report on August 13, 2019.1H2019, the company’s operating income13.770,000 yuan, an increase of 58 in ten years.26%; net profit attributable to mother 0.24 ppm, -0 from the same period last year.55 trillion turns losses into profit; net profit after deduction is 0.0002 trillion, just over the breakeven line, but -0 from the same period last year.Significant improvement at 69 ppm; dilute gain 0.06 yuan.  In the second quarter of 2019, the company’s operating income was 5.400,000 yuan, an increase of 148 in ten years.22%; net profit attributable to mother-0.28 trillion, a loss of 0 a year.54 ppm; net profit not attributable to mother-0.50 trillion, a loss of 0 a year.3.6 billion.The reason for the company’s single quarter forecast is mainly because 2Q is a relatively low season.In 1H2019 and 2Q2019, the company’s gross profit margin was 36.97% and 33.58%; net profit increased by 1.71% and -5.27%.  Comment: The juice tea company has sold 800 million yuan a year since its launch, becoming a new trend-setting model.As of 1H2019, the company’s product types are classified into classic series, good material series, liquid milk tea and fruit juice tea according to sales scale, corresponding to income 4.67/2.44/0.63/5.880,000 yuan, with a ten-year change of +7.90% /-18.34% /-50.60% / none.The overall income of solid milk tea in the first half of the year was 7.1.1 billion, down 2 a year.8%, the first is the company to change the series of packaging.The solid milk tea business is in the adjustment period in the first half of the year, and it has a capacity to upgrade new products in 3Q. The second half of the year is the peak sales season for solid milk tea. It is believed that H2 solid milk tea accounted for 74% of the 18 years and completed 30.There is little pressure on the 600 million guidance target.The decline in liquid milk tea revenue was mainly due to the company’s focus on selling fruit juice tea, and its lean resources.Since the launch of fruit juice tea in July 18, sales have been good, and the quarter-to-quarter growth has been substantial, with 18Q3 / 18Q4 / 19Q1 / 19Q2 revenues being 0.56/1.45/1.71/4.18 trillion, a sales fiscal year contribution of 7.The revenue of 8.9 billion has become a big hit in the soft drink market.The launch of the ready-to-drink series made up for the company’s temporary shortcomings, accounting for 32% of revenue in 19Q2.7%, an increase of about 25 in the same period of 18Q2.1 unit.In terms of channels, 1H2019 dealers, e-commerce, exports, and direct sales revenue were 12 respectively.94/0.57/0.10/0.2 billion yuan, with a growth rate of 57.16% / 64.03% / 1211.17% / none, all channels have increased significantly.  From “ordering by sales” to “determining production by sales”, the market momentum is good.The company mainly adopts the “purchase-to-order” model for procurement. The supply chain center formulates the company’s annual and monthly production plans, formulates a procurement budget, and formulates a procurement plan based on the company’s sales orders and the annual and monthly sales plans jointly formulated by the company and the distributor.Arrange the release of purchase orders and follow-up storage.At the same time, adhering to the production model of “selling production with sales” is conducive to the company’s strict control of inventory, ensuring product freshness, and more in line with the product’s demand for raw material quality.1H2019, the company’s advance payment1.07 billion, down 1 from the previous month.US $ 0.5 billion, mainly due to the reduction in the volume of juice tea and the normalization of orders for sales to production.In terms of different regions, the company’s regional markets sorted by sales scale are East China, Southwest China, Central China, Northwest China, South China, North China, Northeast China, and the corresponding revenue is 4.99/2.25/2.08/1.34/0.92/0.85/0.51 ppm, an increase of 29 in ten years.57% / 60.38% / 90.59% / 55.26% / 77.48% / 120.19% / 324.03%.East China, a strong region, achieved 30% growth, and the growth rate in non-strong regions continued to rise.It is worth mentioning that the coverage rate of juice tea currently available in terminal outlets nationwide is only 12.At the same time, the proportion of goods sold in the company’s registered outlets is only 48.9%. On the basis of the company’s recovery of the power of distributors to gradually realize terminal expansion, there is ample room for improvement in juice tea coverage.As of the end of June 2019, the company has a total of 1,377 dealers across the country, and has established a national sales network that basically covers domestic large and medium-sized cities and counties.The report reports that the production capacity of milk tea factories in Huzhou, Chengdu, and Tianjin has been released, and at the same time, the continuous sinking of channels has increased market demand.  Short-term fluctuations were caused by the off-season sales, and profitability continued to improve.The company’s gross profit margin of 2Q is generally expected, mainly due to the company’s production off-season and insufficient capacity available, which led to the unit cost hub moving upward.Analog beer companies in this period also tended to record single-quarter breakthroughs during the low-season 4Q, which does not mean that the company has no long-term profitability.However, this year’s fruit drinks supplement company’s product strength characteristics, while 2Q dealers actively purchase, to achieve a decrease in gross profit margin decreased to 36.97%, an increase of 6 per year.02 units.We judge that with the further increase in the sales scale of juice tea, the gross profit margin will further improve in the second half of the year (down 3-4).The absolute value of the expense ratio does not change much every quarter, because the scope of expenses is to ensure the company’s stable operating needs for the fixed expenses, but to ensure that there is sufficient momentum in the launch of new products.The initial four expense ratios totaled 35.80%, down by 6 every year.33 units.Among them, accounting for 28% of the largest selling expenses.38%, a significant decrease of 8.In 2009, the increase in sales expenses was mainly due to the increase in advertising costs, marketing expenses and other expenses. At the same time, this year’s freight costs reached 79.07 million yuan, an increase of 113%, corresponding to the increase in the net weight of juice tea relative to the solid milk tea.Management expenses 7.26%, mainly because the company’s equity incentive expenses 青岛夜网 accrued 3181 million; R & D expense ratio 1.31%, an increase of 0.89 units, mainly caused by research and development of new products and technical renovation of Huzhou factory; financial expense ratio is 0.16% is basically stable.In summary, we believe that through the arrival of the company’s new fiscal year (the company and its distributors take the July 1-June 30 the following year as the accounting cycle) and the 4Q stocking season, the performance of 2H19 will improve sequentially.And the growth of the company’s juice tea scale will further reduce the company’s unit cost, smooth the excessive distortion of the company’s products, and gradually release the early cultivation results.  Earnings forecast and rating: We expect Xiangpiaopiao to return to her net profit in 19-21 3.80/4.88/6.24 trillion, a growth rate of 20.88% / 28.40% / 27.70%; EPS (diluted) is 0.91 yuan / 1.16 yuan / 1.49 yuan.Maintain the company’s “Buy” rating.  Pioneer catalyst: 1) Solve the problem of production capacity and grasp the domestic consumer market.2) Profit turning point will appear in 2019.  Risk factors: 1) New product market response is less than expected; 2) Traditional product growth trend; 3) Product life cycle forecast; 4) Associated low-price dumping, high sales expense ratio;After capacity utilization is too low.