Qianhe Flavor Industry (603027) 2019 Interim Report Review: Performance Exceeds Expectations Stable Growth of Various Categories

Qianhe Flavor Industry (603027) 2019 Interim Report Review: Performance Exceeds Expectations Stable Growth of Various Categories

The performance was lower than expected at a low base, and the cost-effectiveness ratio gradually increased the company’s 19-year H1 revenue5.

9.4 billion (+24.

07%), net profit attributable to mother 0.

8.7 billion (-35.

55%), deducting non-attribution net profit 80.16 million yuan (+34.

35%), the transfer of 100% shares of the subsidiary in the same period last year, the distribution of income 6910 million caused by non-recurring gains and losses, single Q2 revenue of 300 million increased by 30%, deducting non-attribution net profit of 36.62 million yuan increased by 62%The Q1 average was significantly higher than the previous quarter, and the performance was better than expected. The main reason was that the condiment business was replenished and sold actively. The previous expenditures were effective and the base in the same period last year was reduced.

H1 gross profit margin 46.

61% (+ 3cts) was mainly driven by the growth of high-end products such as zero-adds, which drove structural upgrades. Zero-added products accounted for nearly 60% of the total. The brand focus was positive. H1 sales expense ratio was 23.

51% (+4.

1pcts) The main reason is that budget advertising expenses increased by 44% and employee budgets increased by 61%. The strategy of allocating expenses to the company’s ultra-high-end products has gradually developed significantly; management + R & D expense ratio6.

85% same as minus 1.

1pct, in which single Q2 is reduced by 3.

5pcts, mainly due to the recognition of the allocation of incentive costs in the same period last year, and the cost-effectiveness ratio has continued to improve since Q2.

Under the comprehensive influence, H1 deducts non-net interest rate13.

5% (+1 pct), the company has maintained double-digit revenue growth in the four quarters since 18H2, and there is sufficient room for profit rebound after pressure on advertising fees is released.

With zero addition as the representative of the high increase in condiments, the base camp performed positively, the company’s condiment business H1 revenue5.

300 million with a 22% increase, of which soy sauce 3.

5.6 billion (+ 37%), the increase in growth has increased, zero-added products have been focusing on positive results since they were renewed in November last year, with an increase of 40% +; vinegar 0.

9.9 billion (+20.

(87%), the promotion effect since the remodeling in February has been recognized by the market, the bundled income has been gradually recognized, and the base of cooking wine has increased by about 30%.

Caramel color 78.43 million (-17.

(64%). The decrease was mainly due to the impact of the loss of more than 40 million customers in Q2 last year. The supplement mainly came from double profitability and powdered caramel color.

The company focuses on zero-addition as its core strategy, adheres to the strategy of supplementing high fresh soy sauce, and insists on expanding the market inside and outside the province for common development: continuing to cultivate the southwestern base market, focusing on product upgrades, and H1 revenue2.

9.3 billion increased by 16.

4%, accelerated month-on-month, the southwestern region focuses on first-tier cities and the top 100 counties. East China, South China, North China, Central China, Northwest China and Northeast China both increased by 28% /-12% / 65% / 45% / 50% / 56%.Affected by the business scope of caramel color in South China, online growth of 59% maintained high growth.

Company announcement with 1.

5 billion cash acquisition of 100% equity of Zhenjiang Hengkang Sauce and Vinegar is expected to strengthen the regional channel and category advantages in East China, strengthen the multi-channel marketing layout, stably expand production capacity, and tolerate the company’s recent efforts to strengthen brand packaging upgrades and marketing, and expand ground expansion in Sichuan and Chongqing.The effect of media launch is expected to be gradually realized; in the future, community consumption habits will be trained through the addition of channel guides.

It has made efforts in five channels, namely retail, catering, special communication, e-commerce, and international trade. The catering channel layout is organized through a one-hundred-person team, and the small base promotes acceleration.

At present, the company’s capacity expansion project is being implemented steadily. The 10-inch soy sauce production line is expected to be put into use by the middle of the year. Profit forecast and 杭州桑拿 estimation: We are optimistic about the company’s positioning of high-end condiment companies and the development space for differentiated race tracks. It will rapidly expand from regional leaders to outside the province.Channel operation contributed incremental increase, marketing strengthened brand power continued to increase, maintaining EPS 0 in 2019-2021.



81 yuan, corresponding to PE41 / 32/25 times, and the one-year target is estimated at 24.


6 yuan, maintain “Buy” rating.

Risk factors: fierce market competition; risk of cost fluctuations; excessive investment costs