Shun Xin Agriculture (000860) 2019 Third Quarterly Report Review: Liquor Steady Growth Causes Pressure on Profits

Shun Xin Agriculture (000860) 2019 Third Quarterly Report Review: Liquor Steady Growth Causes Pressure on Profits
The performance was lower than expected, and a number of factors led to a decline in profits in 2019Q1-Q3 revenue of 110.6.2 billion (+20.19%), net profit attributable to mother 6.6.5 billion (+23.93%); of which 19Q3 revenue was 26.4.6 billion (+34.25%), net profit attributable to mother 0.1.7 billion (-69.71%), the performance exceeded expectations, we believe that the main reasons are as follows: first, the company’s adjustment and adjustment of liquor discharge methods (including sales and other expenses included in costs) are still affected; second, affected by swine fever, the slaughter costs increased in the third quarterErosion of some profits; Thirdly, the decrease in revenue recognized in the 19Q3 land business and amortization of fixed costs also dragged down profits.19Q1-Q3 gross profit margin 34.91% (-3.24pcts), of which 19Q3 gross margin was 28.83% (-3.44pcts), mainly due to changes in accounting methods, 19Q3 slaughtering costs increased and 19Q3 middle- and low-end liquor volume dragged down the overall gross profit margin.19Q1-Q3 net interest rate 6.07% (+0.42pcts), of which 19Q3 net interest rate is 0.74% (-1.38pcts), mainly due to lower gross profit margin and higher sales expense ratio2.68pcts, the management expense rate rose slightly.29pcs and so on. Liquor maintains steady growth, and actual profits are under short-term pressure. From the product point of view, due to the impact of accounting methods, the volume of low-end and mid-end products (the improvement of the proportion of white cattle in 19Q3) has an impact on the profit of liquor.19Q1-Q3 revenue is about 9 billion, with a growth rate of about 15%, and net profit growth is about 15%; of which 19Q3 liquor revenue is expected to be about 2 billion, a growth rate of about 15%.Grassroots research shows that the growth rate of the Yangtze River Delta in 19Q1-Q3 was more than 40%, and that of the Pearl River Delta and Shandong was more than 20%.The pork revenue of the pork business in 19Q1-Q3 exceeded 2 billion, which made an important contribution to the performance of 19Q3. As the current pig price continues to grow, we expect the profitability of the pork business in 19Q4 to improve.Real estate 19Q1-Q3 revenue of about 2 billion, 19Q3 recognition of revenue and at the same time fixed cost amortization also brings profit returns, it is expected that 19Q4 will recognize revenue. Product channels are two-pronged, with nationalization and channel sinking at the same time. The company implements “2 + 6 + 2”. At present, Beijing and Tianjin are the core, two provinces such as the two mountains are the focus, and the Yangtze River Delta and the Pearl River Delta are one line.From national expansion to market development.On the product side, high-end Erguotou, traditional Erguotou, Niulanshan century-old series, aging series and treasured Niulanshan pyramid-shaped product structures are currently formed; the headquarters upgrades the product structure and promotes the aging of rare products.(About 60%), the product structure continues to be optimized;夜来香体验网 the out-of-town area still mainly promotes the aged series, and actively cultivates consumers. Investment suggestions The current national expansion and product structure upgrade of the company will continue to harvest the market share of low-end wine.In view of the lower-than-expected 19Q3 liquor performance, we cut EPS 1 for 2019-2021.38/1.81/2.43 yuan (previous value was 1 respectively.55/2.03/2.64 yuan), currently expected to correspond to PE34 / 26/19, the reasonable deviation range for the coming year is 57.92-59.73 yuan, maintain “Buy” rating. Risk reminders: Liquor industry demand forecast; Liquor industry policy adjustment; Core product sales are less than expected;