Qiaqia Food (002557): optimistic about the rapid growth of income continues-China Finance Forum Minutes (2)
Company dynamics keep up-to-date with the performance of companies in the industry We recently invited Qiaqi Food leaders to participate in CICC’s annual strategy meeting and have in-depth exchanges with investors.
We judge that the company’s 4Q19 product sales will benefit from the early Spring Festival and perform well. At the same time, the 19-year pressure on the cost side is generally controllable. We maintain our judgment of the company’s rapid growth in 2019 performance and look forward to the rapid growth of large single products in 2020.
Commenting on the Spring Festival is expected to boost 4Q19 sales performance in advance, optimistic that next year’s revenue growth will continue to benefit from the strengthening of brand power and product power.
According to our grassroots research, the company’s recent large single product sales have been good, and the group purchase channel has also begun to benefit from the early Spring Festival stocking and volume growth. We judge that the Spring Festival will be good for 4Q19 revenue performance in advance, or it will achieve a faster growth than 3Q19.
Looking forward to next year, we believe that the company’s revenue growth will continue to benefit from the strengthening of brand power and product power. Large single product daily nut yellow bags, sunflower seed blue bags, and red bags will continue the rapid growth momentum of 2H19. Brand penetration in vulnerable markets in northern regionsThe rate will continue to increase, group purchases, and new channels for e-commerce will also maintain rapid growth.
The product structure is upgraded and production efficiency is improved. It is expected to hedge against potential cost pressure next year.
We judge that as the leader of the domestic sunflower seed industry, the cost of sunflower seed raw materials is expected to remain stable and the pressure is controllable next year, and the nut raw materials need to be directly harvested globally, so there is a certain upward pressure on costs.
However, considering the upgrade of the company’s sunflower seed product structure, such as the rapid growth of high gross profit and large single product blue bags, it will help improve the gross profit level of the sunflower seed business, as well as the increase in the automation rate and scale effect of the daily nut yellow bag production line. We believe that hedging is expectedWith potential cost pressure next year, we expect gross margin to remain stable next year.
It is expected that the marketing growth will remain strong, and the expected expense ratio is within a reasonable range.
We believe that the company is in the market stage of important new products, and the brand launch is not diminished. The higher growth rate of e-commerce in new channels will also slightly increase the sales expense ratio.However, we expect that the cost rate level this year and even next year will remain stable due to the quarterly balance of costs.
It is recommended to consider that the Spring Festival is expected to boost sales in 4Q19 in advance, as well as optimistic about the performance of the company’s 杭州桑拿网 large single products next year, and slightly increase the 2019/2020 EPS forecast1.
1% / 1.
1% to 1.
Considering the evaluation switch and the center move up, we give 30 times P / E in 2020 and raise the target price by 21% to 38.
The current price corresponds to 30/26 times P / E in 2019/2020, with 14% upside.
Maintain Outperform rating.
Risks Raw material costs fluctuate, category demand changes, industry competition intensifies, food safety incidents