Shuijingfang (600779): Expected slight increase in revenue growth in the second half of the year

Shuijingfang (600779): Expected slight increase in revenue growth in the second half of the year

1H19 results were slightly lower than our expected 1H19 results: revenue 16.

890,000 yuan, an increase of 26 in ten years.

46%, an increase of 13 from the previous month.

96%; net 四川耍耍网 profit attributable to mother 3.

40,000 yuan, corresponding profit of 0.

695 yuan, an annual increase of 26.

97%, an increase of 8 from the previous month.


Of which 2Q19 achieved income 7.

60,000 yuan, an increase of 29 in ten years.

25%, net profit attributable to mother 1.

21 trillion, corresponding to a relative profit of 0.

248 yuan, an annual increase of 7.


Revenue was in line with expectations, but net profit attributable to mothers was lower than our expectation, mainly due to fierce market competition and a 47% increase in selling expenses in 2Q19.

Development Trends First of all, we expect 2H19 revenue growth to further increase to about 25%.

The company is entering a nationwide period of in-depth development. Further growth depends not only on investment promotion, but also on refined management of channels and further improvement of product power.

According to our survey of dealers, channel inventory growth in the first half of 2019 increased by one month, so revenue in the second quarter accelerated to 29% month-on-month.

In essence, the company’s growth in the price of more than 500 yuan is still greater and weaker, and requires strategic brand promotion and the improvement of base wine quality, otherwise at 300?
The price of 500 yuan will face more competition from regional leaders and sub-high-end leaders.

The current positioning of Zhennong No. 8 and Jingtaizhuang can meet the banquet consumption of most middle-class families, but we believe that without upgrading, future revenue will depend more on sinking channels, which will increase and increase.

In the end, the company’s expense expenditure is in sync with the revenue growth, mainly due to the substantial increase in advertising expenses. We predict that the profitability of the next year is expected to gradually increase through scale effects.

We believe that the company’s future long-term growth potential lies in a deep grasp of 300?
Two price points of 500 yuan and modest price expansion and category expansion.

Earnings Forecasts and Estimates Due to fierce second-end competition, we lower our net profit for 2019 and 20208.

1% and 6.

1% to RMB 7.

520,000 yuan and RMB 9.

7.8 billion.

Currently corresponds to 32 in advance.

0 times 2019 P / E ratio and 24.

7 times 2020 price-earnings ratio.

Maintain Outperform rating and 58.

Target price of 60 yuan, corresponding to 38.

0 times 2019 P / E ratio and 29.

3 times the 2020 price-earnings ratio, compared with the previous inclusion of 18.

7% upside.

Risks If the next high-end competition further intensifies, the company’s sales growth rate may decline.