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Fragrant flavour (603711): The perfect ending of FY18, juice tea hits one billion big items

Fragrant flavour (603711): The perfect ending of FY18, juice tea hits one billion big items
Performance summary: The company achieved operating income in the first half of 201913.800 million (+58.3%), the net profit attributable to mothers is 23.53 million yuan, and the profit for many years is 78.11 million yuan.Q2 achieved operating income of 5.400 million (+ 148%), net profit attributable to mother-28.43 million yuan, a loss of 54.45 million yuan in decades.Performance is in line with expectations. Juice tea has performed well, and it has become a billion-dollar item in just one year after it was launched.1. By product: 1) The company’s juice tea 19H1 achieved revenue 5.870,000 yuan, of which Q2 single quarter 4.With a production capacity of 1.6 billion U.S. dollars and the gradual advancement of channel construction, juice tea is showing a rapid volume increase.Since its listing in July last year, the cumulative sales of fruit tea has exceeded 7.900 million, sales of over 1 billion, becoming the tea beverage market after Xiaoyue classmates, after tea π another billion-dollar large single product.At present, the juice tea company puts 48 in its own channels.9%, omni-channel distribution rate is only 12.6%, the market space is still huge.The Tianjin plant and the Sichuan plant will be put into operation one after another, which will greatly increase the production capacity 佛山桑拿 of juice tea, and the sales volume will be promoted to another level in the future.2) Liquid milk tea (Lanfangyuan + cow’s milk tea) achieved revenue of 63.67 million yuan (-50%) in 19H1. First, the company will focus on juice tea, adopt a contraction strategy for Lanfangyuan and cow’s milk tea, focusing on core markets and consumption.Group, the current sales performance is good, the overall inventory is benign.3) Revenue from brewing business 19H17.1 ‰ (-2.8%), of which the good material is 2.400 million (-18.3%), the classic line 4.700 million (+7.9%), as the company considered upgrading packaging in the second half of the year, Q2 digested channel inventory and reduced shipments, resulting in Q2 replacing 40%.At present, the channel is loaded lightly, and it has the capacity to push new products in the second half of the 北京夜网 year.2. In terms of channels and regions: 1) In terms of channels, the distribution channel is still the main force (+ 57%), and the e-commerce channel continues to develop (+ 64%). The company integrated Lanfang Park to open overseas markets and recorded 9.7 millionRevenue (+ 1212%).2) In terms of regions, the markets of Northeast, North China, and Central China are growing fast, mainly benefiting from the volume of fruit juice tea, and all regions of the country are showing overall growth.The company currently has 1,377 dealers, an increase of 255 (mainly operating beverage channels), and elimination of 165. The net increase of 90 dealers at the end of the earlier 18 years. The company aims to expand tolerance of dealers while also carrying out advantages and disadvantages to improve distributionThe combat effectiveness of the business team. In FY18, the business closed smoothly, and the brewing business grew steadily.Company FY18 (18.7-19.6) Perfect closing, main business realized income 37.400 million (+ 28%), of which the brewing business continued to grow under the channel intensive cultivation + product taste innovation (+6.3%).The ready-to-drink segment mainly benefited from the volume of large-scale single products of juice and tea, and realized revenue9.500 million (+ 216%), revenue share increased from 10% in FY17 to 25%.The ready-to-drink business has become the company’s strong second growth curve, relaying the business to maintain rapid overall growth. Profit was achieved in 19H1, the gross profit margin of the volume of juice and tea improved, and high expenses were maintained to maintain high expenditures.1. The overall gross profit margin of the company H1 is 36.7%, an annual increase of 6pp, the second quarter gross margin of 33.6%, an increase of 16.4%, mainly due to the increase in the delivery volume of the ready-to-drink segment, the gross profit margin has increased significantly. It is expected that the overall gross profit margin of Q2 juice tea will reach 33%, which is significantly higher than the 23% at the end of 18.2. In terms of expenses, the company continued to maintain a high-profile strategy in the promotion phase of new juice tea products. The online and offline spending continued to be high, such as sponsoring popular variety shows such as “Hip-hop” and “Extreme Challenge”, and organizing multiple university promotions offlineActivities, sales expenses + 23% per year, sales expenses rate dropped 8 under rapid income growth.1pp to 28.4%; management expense ratio (including research and development) is 8.57%, ten years +2.92pp, mainly due to the company’s equity incentive expenses accrued 31.81 million yuan, research and development of new products caused an increase of 14.3 million yuan in research and development costs; financial expense ratio of 0.16% is basically stable.The overall three fee pricing is 37.1%, a decline of 5 per year.0pp, leading to a significant improvement in net interest rate, 19H1 net interest rate rose 8pp to 1.71%. Juice tea sells well and the company’s growth logic is clear.Judging from the current overall sales situation, fruit tea sales are good, consumers have high recognition, and channel inventory is relatively benign.At present, the juice tea is in the rising period of its life cycle, and it will only continue to grow in the next 2-3 years: 1. Low market penetration and several times space for channel expansion; 2. Online marketing resources occupy more room.At the same time, the company also launched new light milk tea products to create a matrix of ready-to-drink series products to ensure sustainable growth.At present, the company’s development trend is relatively good, and the second growth curve is gradually on the right track. The synergy effect of the ready-to-drink and brewing business is gradually realized, and the long-term growth logic is clear. Earnings forecasts and investment advice.It is expected that juice tea will reach 1 billion in ten years, and the compound growth rate of revenue from 2019 to 2021 is 27.2%, the compounded net profit compound growth rate is 30%, and EPS are 0.94, 1.24, 1.65 yuan, corresponding to PE is 41X, 31X, 23X, maintaining the “buy” level. Risk warning: raw material prices may fluctuate sharply, and juice tea sales may fall short of expectations.