Guangzhou Restaurant (603043): Omni-channel sales accelerate expansion outside the province, long-term capacity release is worth looking forward to

[Event]Guangzhou Restaurant released its 2018 annual report and achieved an operating income of 25.

37 ppm, an increase of 15 in ten years.

89%; net profit attributable to mother 3.

84 ppm, an increase of 12 in ten years.

79%; deduct non-attributed net profit 3.

69 ppm, an increase of 11 in ten years.

45%; EPS is 0.

95 yuan / share.

Non-recurring profit and loss items are mainly government subsidy income and investment income from wealth management products.

In terms of quarters, Q1 / Q2 / Q3 / Q4 revenues increased by 15 respectively.

47% / 14.

73% / 21.

89% / 4.

86%, the annual growth rate of net profit attributable to mothers is 43.

70% / 39.

03% / 51.

90% / -39.

twenty three%.

Mooncake sales have obvious distortions. The Mid-Autumn Festival on September 24, 2018, all mooncake revenues are included in Q3, affecting the growth rate of Q4 revenue.

At the same time, the company increased the construction of Internet marketing and channel sales systems such as dealers outside the province, the implementation of a fair incentive plan, and increased investment in technology research and development, thereby increasing the expense ratio during Q4 and reducing the growth rate of net profit attributable to mothers.

The company plans to distribute a cash dividend of 4 for every 10 shares.

0 yuan (including tax), the dividend ratio is 42.

09%.

The company released the 2019 first quarter report, which reported integration to achieve revenue5.

33 ppm, an increase of 19 years.

79%; net profit attributable to mothers is 45.51 million yuan, an annual increase of 17.

94%, net profit after deduction is 41.87 million yuan, an annual increase of 10.

77%.

[Comment]1) The performance is in line with expectations, and the gross profit margin is steadily increasing. ① Revenue: In 2018, the food manufacturing industry and the catering industry achieved revenue of 18 respectively.

9.2 billion, 6.

10,000 yuan, an increase of 18 in ten years.

59%, 7.

46%, accounting for 75.

37%, 23.

94%.

Among food-manufacturing products, mooncake sales remain the mainstay of revenue.

Moon cake series products, frozen food and other products achieved revenue of 10 respectively.

3.8 billion, 4.1 billion, 4.

600,000 yuan, an annual increase of 15.

67%, 29.

86%, 16.

34%.

Deeply plow the Guangdong area and accelerate expansion outside the province.

Within Guangdong Province, within and outside Guangdong Province, and overseas, the revenues were 21 respectively.

2 billion, 3.

570,000 yuan and 31.24 million yuan, an annual increase of 11.

02%, 54.

21%, 20.

27%.

Guangdong Province has always been the company’s key sales area. The company continues to cultivate the Pearl River Delta region, and at the same time expands the market development in eastern and western Guangdong.

At the same time, the company increased investment in Internet marketing, effectively integrated online + offline resources, focused on developing distributors outside the province and optimizing product structure, increasing sales coverage in eastern and central China, and promoting rapid growth in sales outside the province.

Online gambling in 2018 3.

100,000 yuan, an annual increase of 48.

09%, revenue share increased by 2.

66 points to 12.

twenty two%.

② Cost: In 2018, the comprehensive gross profit margin increased by 1.

46pct to 54.

19%.

The gross profit margins of the food manufacturing and catering industries increased by 2 respectively.

06pct and 0.

85pct to 51.

82% and 62.

71%.

Among them, the gross profit margin of moon cake series products / quick frozen foods / other products increased by +1.

70pct / +4.

04pct / +2.

31 points to 63.

22% / 36.

92% / 38.

07%.

Moon cake series products and the catering industry maintained a stable high gross profit margin, and the gross profit margin of food products such as quick freezing continued to increase.

In 2019Q1, the comprehensive gross profit margin dropped slightly from the same period last year.

54 points to 47.

14%.

③ Expenses: In 2018, the expense ratio will increase by 2.

42pct to 36.03%, in which the sales / management / R & D / financial expense ratios respectively change +0.

78pct / + 0.

78 points / +1.

05pct / -0.

19 points to 25.

93% / 9.

09% / 1.

91% /-0.

90%.

The increase in sales expense ratio was mainly due to the company’s construction of an omni-channel sales system to accelerate expansion outside the province.

The increase in management expense ratio was mainly due to the implementation of the company’s equity incentive plan.

The increase in the R & D expense ratio was mainly due to the company’s increased R & D investment and 17 internal technology projects, including the company’s food manufacturing products and catering dishes research and development and technological innovation.

The initial reduction in the financial expense ratio was the full use of funds for cash management, which increased interest income.

During Q1 2019, the expense ratio increased by 0.

44 points to 35.

93%, of which the sales / management / R & D / financial expense ratios have doubled -1.

18pct / +0.

45pct / +0.

68pct / + 0.

49 points to 25.

37% / 9.

86% / 1.

38% /-0.

69%.

④ Profit side: Profitability is slightly involved.

In 2018, the net interest rate decreased by 0.

42 points to 15.

13%.

In the first quarter of 2019, the short-term net interest rate decreased by zero.

13pct to 8.

55%.

2) The food manufacturing industry continues to develop and the catering business steadily seeks to enter the food manufacturing industry: the company 北京夜网 has multiple food production bases already invested or under construction in Guangzhou, Xiangtan, Meizhou, and Maoming. The company and its subsidiaries have 200 cake houses.

In 2018, the output of moon cake series products and frozen foods were 1.

16 initial, 2.

06 for the first time, increasing by 10 every year.

27%, 22.

89%; sales were 1.

15 for the first time, 2.

02 for the first time, increasing by 9 every year.

92%, 20.48%; inventory 135.

85 tons, 1,998.

03 tons, a year change -13.

79%, +22.

82%.

The moon cake, a pillar product, continued to sell well, production was reasonable, and inventory was significantly reduced.

Catering industry: The company has 18 catering outlets and 1 shareholding store.

In 2018, two new stores were expanded and included in the blank area of Guangzhou. The preparatory work for Shenzhen brand stores has been completed and will open in 2019.

In addition, the company purchased two Guangzhou catering store properties to lay the foundation for store expansion.

3) The production capacity has been released successively, and the national layout advantage has begun to appear. The development of research and development has helped endogenous growth companies to raise funds to resolve production capacity deviations and realize the layout outside the province. They have successively set up projects in Xiangtan and Meizhou production bases.M & A work on park projects.

The cross-region production capacity linkage layout can highlight regional functional positioning and improve management and control efficiency.

The company plans to use intelligent manufacturing in the new base to improve the level of intelligent production.

In addition, with the expansion of production projects, the company’s products have further expanded to eastern Guangdong, western Guangdong, central and eastern China, and gradually expanded to the whole country.

The company continues to increase research and development funding, and has successfully established 17 scientific and technological projects in cooperation with industry research, research and development institutions, applied for 46 patents, obtained 7 authorized patent certifications, marketed 25 new products, 7 improved products, and reserved more than 100 products.
In 2018, the number of R & D personnel of the company reached 289, accounting for 6 of the total number of companies.

39%.

R & D funding accounts for 1 of operating income.

91%, with an annual increase of 1.

05pct.

4) Profit forecast: The company’s EPS for 2019-2021 is expected to be 1.

17/1.

44/1.

60 yuan / share, corresponding to PE is 25.

4/20.

6/18.

5 times.

We are optimistic about the company’s development strategy of “establishing a brand in catering and creating scale in food”, as well as the pace of expansion from Guangshen to the whole country, and maintain the “recommended” level.

Risk reminders: The release of production capacity does not meet expectations; the expansion of channels cannot digest and supplement the production capacity;