Hengshun Vinegar Industry (600305): Expansion of categories after deducting non-performing performance helped improve product structure

Hengshun Vinegar Industry (600305): Expansion of categories after deducting non-performing performance helped improve product structure

Investment Highlights: Event: The company releases its 2018 annual report.

Realized operating income in 201816.

94 ppm, a ten-year increase of 9.

87%, net profit attributable to mothers3.

50,000 yuan, an increase of 8 in ten years.

44%, net profit after deducting non-return to mother 2.

19 ppm, an increase of 21 in ten years.


Realized operating income in the fourth quarter of 20184.

580,000 yuan, an increase of 7 in ten years.

34%, realized net profit attributable to mother 0.

8.6 billion, down 36 each year.

56%, net profit after deduction is 0.

60 ppm, an increase of 16 in ten years.


The company intends to distribute a cash dividend of 1 per 10 shares to all shareholders.

2 yuan (including tax).

Investment Ratings and Estimates: The company’s condiment revenue performance was basically in line with expectations, and we slightly adjusted our revenue forecast for 2019-20 to 19.

1, 21.

200 million (previously 19.

5, 21.

500 million US dollars, new revenue forecast for 202123.

600 million, an increase of 12 each year.

7%, 11.

2%, 11.

0%, taking into account the expected progress of asset disposal, lowered the net profit forecast for mothers in 2019-20 to 3.

03, 3.

4.6 billion (previous time 3.

57 and 3.

9.8 billion yuan), plus forecasts for 2021.

99 ppm, respectively, increasing by -0 per year.

7%, 14.

2%, 15.


The latest closing prices correspond to PE of 34 and 30 times in 2019-20, maintaining the overweight level.

As a leader in the vinegar industry, the company expands and upgrades its own contradictions in the context of low industry concentration and the continuous promotion of consumption upgrades. At the same time, the company’s receptor system is limited and its overall operating efficiency is significantly higher than other leaders in the condiment industry.If the management mechanism can be improved in the future, there is considerable room for potential improvement in profitability.

Compared with the main main non-condiment business, the revenue growth was relatively stable. The vinegar products maintained a steady growth, and the performance of non-vinegar condiments was outstanding.

34%, a month-on-month growth rate of 5.64pct, while the parent company ‘s reported operating income grows by 11 per year.

88%, a slight acceleration from the previous quarter. As the company’s condiment business is mainly carried out by the parent company, it is expected that Q4 condiment business revenue will maintain a double-digit steady growth. The overall revenue is mainly due to non-condiment business interference.

In terms of different products, vinegar products have achieved income for 11 years.

63 ppm, an increase of 12 in ten years.

49%, of which high-end vinegar increased by 15.

07%, the high-end product structure was further promoted, and white vinegar realized revenue1.

63 ppm, an increase of 13 in ten years.

27%; cooking wine realized income1.

930,000 yuan, an increase of 26 in ten years.

59%, significantly faster than the whole, mainly due to the company’s implementation of the active market strategy of priority share; conversion, other small categories such as soy sauce also have 18 years faster than the overall revenue growth performance, the company’s product structure continues to improve.

In terms of different regions, East China is still the company’s main source of condiment revenue, accounting for more than 50% of revenue, and has achieved an income growth of more than 20% in 18 years, which is significantly faster than other regions, mainly due to further intensive cultivation andFor the expansion of small categories, the company will continue to promote the expansion of the foreign port market based on the base of East China in 19 years.

The lower-than-expected net profit was mainly due to the slow progress in asset disposal, and the net interest rate remained stable after deduction: the company realized net profit attributable to its mother in 18 years.

50,000 yuan, an increase of 8 in ten years.

44%, reaching the initial budget target, mainly because the asset disposal progress exceeded expectations, after deducting non-return to the net profit of the mother 2.

19 北京夜网 ppm, an increase of 21 in ten years.

06%, in line with long-term planning.

Q4 company net profit 16.

05%, a decrease of 15 per year.

62pct, mainly due to non-recurring gains and losses arising from the disposal of assets with consolidated scale in 17Q4.

Net profit after deduction for the fourth quarter of 201813.

11%, an increase of nearly 1 a year.

1pct mainly benefited from the improvement in gross profit margin brought by the optimization of product structure and the weakening of promotional efforts.

18Q4 company gross margin 44.

2%, a substantial increase of 5 per year.

07pct; 18-year conventional seasoning business gross profit margin 43.

34%, an increase of 1 per year.

82pct, of which the gross profit margin of vinegar products is 44.

03%, increase by 2 every year.

02pct, mainly due to the 上海夜网论坛 upgrade of the product structure, the gross profit margin of cooking wine 33.

19%, a decline of 6 per year.

31 points, mainly due to the market competition and price strategies that the company takes to participate in preferentially.

In terms of expenses, 18Q4 sales expense ratio, management and R & D expense ratio were 15 respectively.

9%, 10.

33%, increasing by 2 each year.

11pct, down by 0.

51pct, the overall expense ratio slightly increased, but the margin was lower than the increase in gross profit margin, so after deducting non-profitability, the profitability has continued to increase steadily.

The industry maintains stable growth and expands the scale of growth space. In 19 years, the company is expected to maintain stable development: the vinegar industry has continued to maintain a steady growth trend in number, and the average price brought by growth in sales and product structure upgrades has contributed to growth; andFrom the perspective of the competitive landscape, the industry is still more fragmented. The CR5 of the top 100 companies is 47%, which is significantly lower than 75% of the soy sauce industry. The industry’s outstanding leaders continue to increase their share.

The company announced its 19-year business plan. It is expected that the main business income of condiments will increase by 12%, and net profit after deduction will increase by 15%.

We believe that with the steady growth of the main vinegar industry, the continuous improvement of small-scale condiments, and the initial direct price increase of some low-end and mid-range products, the revenue will continue to maintain a double-digit growth rate. At the same time, the company will benefit the product mix.The adjustment and optimization, as well as the reduction of management and R & D expense ratios for the improvement of internal operating efficiency, achieved a steady increase in net interest rate.

Catalysts for long-term growth: Condiment business revenue grows faster than expected, system reforms have made breakthroughs, and price increases have exceeded expectations Core assumptions Risks: Performance expectations, increased industry competition