Tsingtao Brewery (600600): Focus on upgrading ton price, leading management, improving profitability
Q3 revenue experienced short-term adjustments, and profit growth was slightly faster than expected.The company announced the third quarter report of 2019, and realized revenue of 248 from January to September of 1919.97 ppm, a five-year increase of 5.31%; net profit after deduction to non-returned mothers22.98 ppm, an increase of 27 in ten years.55%, corresponding to basic EPS1.91 yuan / share.19Q3 achieved revenue of 83.USD 4.6 billion, an average of one each year.66%; net profit after deducting non-return to mother 8.53 ppm, an increase of 22 in ten years.70%. Core views Destocking and weather and other factors dragged down sales, structural upgrades continued to increase tonnage prices.Looking at the weight price, the beer sales volume per ton in the first three quarters increased by 0.07%, 5.24%, of which Q3 ton price increased by 4.52%, but sales are slightly below 5.92%.We believe that the main reasons for the decline in sales are: 1) clearing channel inventory; 2) colder and rainier sales; 3) shrinking resource allocation; 4) replacement of low-end deputy cards.Benefiting from previous product price increases, structural upgrades, and reduced growth rates, the ton price continued the rapid upward trend in the first half of the year. In terms of products, the sales of Qingdao brand and sub-brands were 353 from January to September.10,000 kiloliters (+3.25%), 366.40,000 kiloliters (-2.81%), the two sales in the third quarter decreased by 2.42%, 8.87%.We judge that the sales of the main brand in the third quarter were related to the sales of classics, pure health, and small bottles of wine. In 1903, it maintained a rapid growth. The product structure continued to focus on the main brand.In terms of different regions, Q3 Northeast, Henan and other regions have enjoyed promising growth, and core markets such as Shandong and Shaanxi have performed poorly. East China and South China are still adjusting.Looking forward to the fourth quarter, the company ‘s total channel inventory has fallen to a reasonable level after de-chemicalization. The sales of light equipment are expected to improve, which translates into the possibility that we do not rule out the off-season price adjustment. From a long-term perspective, the main growth point of the beer industry in the futureIt is the price, not the volume. We 杭州夜网论坛 recommend that we ignore the short-term sales changes and grasp the upward trend in ton prices. Gross profit margin has steadily increased, and profitability has increased.Short-term sales gross profit margin increased by 1.31 points to 40.34%, mainly due to the increase in ton prices, the cost increase narrowed; the sales expense ratio rose by 0.84pct to 16.12%, presumably due to the decrease in revenue and the increase in freight; the management expense rate also decreased by 0.25 points to 3.68%; taxes and surcharges as a percentage of revenue also decreased by 0.50pct up to 8.16%; net sales margin increased by 1.93 points to 12.0%, profitability has steadily increased.We think that Q2 next year will not be without an incremental rate reduction dividend, but structural upgrades and small-step jogging price increases are still expected to increase the product’s ton price. At the same time, the expansion of competition and mitigation, the strengthening of cost management and control, and the company’s net interest rate increase logic remain valid. Financial forecasts and investment recommendations are attributed to sales growth in Q3. We lower our forecasted sales volume and revenue forecasts. We have raised our forecast for gross profit margins in the context of narrowing cost growth.Adjusted forecast for the company’s 19-21 profit is 1.31, 1.61, 1.89 yuan (the original forecast for 19-21 was 1).29, 1.56、1.88 yuan).Combined with estimates from comparable companies, we maintain a 19-year price-earnings ratio of 43 times, corresponding to a target price of 56.33 yuan to maintain the overweight rating. Risk reminder: the ton price has risen less than expected, the price of raw materials has continued to increase, and industry competition has intensified

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