Taoli Bread (603866): The performance was slightly higher than expected mainly due to the increase in expense ratio

Taoli Bread (603866): The performance was slightly higher than expected mainly due to the increase in expense ratio

19Q1 performance was slightly lower than expected, mainly due to the increase in expense ratio. The company released the first quarter of 19 performance results for 19Q1 company income11.

42 ppm, an increase of 15 in ten years.

52%, a month-on-month improvement. We believe that mainly because 18Q4 began to be sold in the Northeast market, and the promotion of sales was conducted, which had an impact on peach and plum bread revenue.

The company’s net profit attributable to its parent was 19Q1.

21 ppm, an increase of 12 in ten years.

11%, below revenue growth.

In 1Q1, the company’s net margin was 10.

61%, a decrease of 0 per year.

For the 32 PCTs, we believe that the increase is mainly due to the increase in the expense ratio, and the intensified competition in the industry will cause the company to increase its expenses, and the company will increase its expenses to new development 杭州桑拿 markets such as East and South China.

Industry competition is intensifying, and the company’s short-term profits may be under pressure. We believe that the company’s revenue is expected to continue to grow steadily.

(1) The company actively promotes the sinking of the channel, increasing the production capacity of the Tianjin plant, and promoting the steady growth of revenue in mature markets such as North China and Northeast China; (2) The company intends to issue convertible bonds to raise funds to invest in capacity construction in Jiangsu, Sichuan, Qingdao and Zhejiang.It can be completed and put into operation in 2020, which is expected to increase the sales scale and sales outlet coverage and promote the rapid growth of revenue in East China and Southwest China.

The company’s main competitors were mainly sold in Fujian and Northeast China in 18 years. In 19 years, the company will carry out product promotion throughout the country. In the initial stage of market development, it will increase brand promotion and expenses.

We believe that the fierce competition in the industry in 19 years will lead to an increase in the company’s expense ratio. The company’s development of new development markets and the sinking of channels will also bring about an increase in expenses. In the short term, the company’s profits may be under pressure.

In the long run, the company has been deeply cultivating in the bread industry for many years. The products are cost-effective and have strong supply chain management capabilities. It is difficult to shake the leader. After the company’s fundraising projects are put into operation, the transportation distance is reduced, the transportation costs are reduced, and the scale effect will be further manifested.Upgrade, the company’s profitability will still improve.

Earnings forecast We expect the company’s revenue from 19-21 to 57.

14/66.

95/78.

1.6 billion, net profit 7.

54/8.

92/10.

59 trillion, EPS is 1.

60/1.

90/2.

25 yuan / share, corresponding to PE 34/29/24 times.

Currently, the company’s condiment leader PE (TTM), which is the same as the food sector, is 46-54 times. We believe that the company expects to improve the space and give the company 37 times PE in 19 years, corresponding to a reasonable value of 59 yuan per share, and maintain an overweight rating.

Risks indicate that industry competition is intensifying, and the company’s marketing expenses are higher than expected; sales in new markets are lower than expected; the company’s product structure is upgraded or lower than expected; food safety issues.

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