Taoli Bread (603866)： High base + capacity allocation affects short-term revenue growth is expected to resume in the second half of the year

Taoli Bread (603866): High base + capacity allocation affects short-term revenue growth is expected to resume in the second half of the year

Event: The company released the results report for the first quarter of 2019 and achieved revenue11.

4 billion (16%), net profit attributable to mothers1.

200 million (percent + 12%), net of non-attributed net profit1.

2 ppm (previously + 11%), basically in line with expectations.

Revenue: High base + maximum production capacity affects short-term revenue growth.

In 19Q1, the company’s revenue achieved a 16% revenue growth rate, which is slightly higher than the 18Q4 bread revenue growth rate, which is slightly distorted. The essence is: 1) the sales volume of dirty bags of online red products in the first quarter of last year, but the product life cycleThere is no income contribution this year, which affects the growth rate; 2) Insufficient production capacity in some regions affects short-term income growth.

1. Mature areas: Steady growth and considerable potential space.

Thanks to the gradual increase in the penetration rate caused by the sinking of the channel and the double-digits in the Northeast, the short-term capacity in Changchun and Harbin is slightly insufficient, and it is expected to improve quarter by quarter from the second quarter.

In the future, the intensity of sinking through channels will increase, and the Northeast China is expected to maintain stable growth.

2. High-growth areas: market development has increased, and revenue growth is expected to continue to improve.

Due to excessive cautious market investment in the early stage, the growth rate of income in the southwest, northwest, and parts of north China and other regions has a periodical defect.

The company increased market expansion through sales promotion, additional personnel and logistics vehicles, and at the same time shifted to the release of production capacity in factories such as Tianjin and Chongqing. It is expected that revenue growth in Southwest, Northwest, and North China will improve in 2019.

3. New regions: The overall performance is beautiful, and sustained high growth is expected.

The growth rate of Jiangsu, Zhejiang and Shanghai areas has shifted slightly, mainly due to the phase change in production capacity and some markets; the transformation of the radiation area of the South China factory still maintains about 80% growth rate, and the transformation of the Dongguan factory is nearing its end.With the maximization of factory capacity and the increase of sales terminals, the scale of the South China market continues to grow at a rapid rate, and the scale growth is expected to continue to narrow.

Earnings: Expenses remain high, and net interest rates have declined steadily.

In the first quarter, the company’s net profit attributable to mothers was slower than revenue growth, and the net interest rate fell slightly.This is because the company is still in the expansion phase, and its factory layout and market cultivation are ahead of schedule.Revenue growth: 1. Harbin, Shijiazhuang, Qingdao and other places have further increased discount promotions; 2. East China has personnel and vehicles in place, and expenses have increased, and gradually continued market share in the southwest and northwest regions;

The short-term company is affected by the increase in expense, and its profitability has changed slightly; in the long run, the ongoing expense at this stage is conducive to market expansion and forms the basis for future revenue growth.

Factories: Actively deploy new factories to accumulate long-term growth 武汉夜生活网 momentum.

At present, Taoli has established production bases in 17 regions. It is expected that the Wuhan plant will be put into production in 2019 and the Dongguan plant will be transformed; the plants under construction also include the Shandong plant, the Jiangsu plant and the Shenyang plant, which are expected to be put into production around 2020.

In the future, the company will continue to build factories in major regions to expand its reserve capacity for national expansion.

Earnings forecasts and investment advice.

The company’s EPS for 2019-2021 is expected to be 1.

60 yuan, 1.

90 yuan and 2.

21 yuan, corresponding to PE is 34 times, 29 times and 25 times, maintaining the “overweight” level.

Risk reminders: food safety risks, raw material price upside risks, new market development risks that exceed expectations.