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Food and Beverage 2020 Third Quarterly Report Review: Liquor improves at a faster pace, and popular products naturally fall

Release Time:2022-06-15 Topic:Leading stocks in the food and beverage industry Reading:88 Navigation:Stock Liao information > Food > Food and Beverage 2020 Third Quarterly Report Review: Liquor improves at a faster pace, and popular products naturally fall phone-reading

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Core Views


Consumption gradually recovers, long-term optimistic about the food and beverage sector

From January to October 2020, the share price of the food and beverage sector outperformed the market. In 2020Q3, the proportion of fund positions in food and beverages has rebounded, among which the proportion of liquor positions has increased a lot. In addition to meat products, the proportion of popular products in other industries has rebounded. Companies with good fundamentals and stable performance are more likely to be favored by funds. As the domestic epidemic is gradually brought under control, catering has slowly recovered, driving overall consumption to pick up. Looking forward to 2021, the stability of food and beverage fundamentals and the certainty of performance are relatively high, and it is estimated that the proportion of fund positions may remain high. We are optimistic about the liquor sector in the long-term, and suggest to hold Kweichow Moutai, Wuliangye, Luzhou Laojiao, Shanxi Fenjiu, and pay attention to the improvement opportunities of Yanghe shares. Popular products continue to recommend Yili, Zhongju High-tech, Haitian Flavor, etc. It is recommended to pay attention to the opportunities behind the valuation fall, such as Jiabiyou, Huangshanghuang, etc.


Market performance: food and beverage outperformed the market, other alcohol performed better

2020 1- The food and beverage sector rose 57.2% in October, outperforming the CSI 300 sector by 45.2pct, ranking second among the first-tier sub-sectors, among which other alcohol (+97.4%) had obvious excess returns. In terms of the breakdown of the increase, the PE of food and beverages from January to October 2020 increased by 35% compared with the end of 2019, and the net profit in 2020 is expected to increase by 17%. Since entering the fourth quarter, the food and beverage sector rose 3.9% in October 2020, outperforming the CSI 300 by about 1.8pct. The market performance in October is related to the recent recovery of consumption and the results of the third quarter.

Liquor: 2020Q3 revenue accelerated, and the follow-up improvement trend continued

The third quarter was the traditional peak consumption season for liquor, superimposed on the delayed consumption recovery in the first half of the year, consumption Demand has grown significantly. From the channel level, channel inventory is at a low level, and in the third quarter, channel preparation for the peak season appeared to replenish inventory. From the perspective of the winery, the third quarter is an important time for whether the annual sales can be successfully completed. The enthusiasm and urgency of the winery are high, and the third quarter is more important than in previous years. The consumption-driven and demand expansion are compared with the first half of the year. increase. In terms of price, the revenue of high-end liquor in 2020Q3 remained stable, and the prosperity was still the highest in the industry; the sub-high-end price brought revenue and profit the most obvious improvement. We expect that baijiu will still benefit significantly from the festive season during the 2021 Spring Festival.

Volkswagen products: 2020Q3 performance growth rate will naturally fall

Volkswagen products generally declined in revenue growth in the third quarter, the reasons are: first, some compensation during the epidemic Consumption and inventory replenishment are reflected in the second quarter, and 2020Q2 itself is the high point of growth; second, July-August is usually a low season for consumption, and the growth rate will naturally decline. In the third quarter, industry leaders still showed good sustainability, such as Haitian Flavor, Shuanghui Development, Yili, etc. The revenue remained at a slightly higher level than that of the whole year, and the market share was still increasing, which also reflected that the industry was affected by the epidemic. Reshuffle the cards, and the faucet enjoys the bonus of concentration enhancement by virtue of its own strength. Looking forward to 2021, due to the delay of the Spring Festival and the low base in the first quarter, the growth rate may be at a high level, and the company can still grow steadily throughout the year. It is recommended to pay attention to the varieties with more declines in the third quarter, and at the same time the fundamental trend is upward, such as Jiabiyou and Huangshanghuang.

Risk warning: The risk of macroeconomic fluctuations, the risk of consumption recovery being lower than expected, the risk of raw material price fluctuations


1. Food and Beverage Davis double-clicks, the valuation improvement is the main reason for the stock price rise

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1.1, the food and beverage sector outperformed the broader market in terms of growth from January to October 2020

Food and beverage growth led the market, other wines Class performance is excellent. From January to October 2020, the food and beverage sector rose 57.2%, outperforming the CSI 300 sector by 45.2pct, ranking second in the first-tier sub-industry, second only to electrical equipment. In terms of molecular industries, other alcohol (+97.4%), condiments (+79.0%), and comprehensive food (+63.3%) have obvious excess returns. Soft drinks (+4.6%), rice wine (+4.2%), and wine (+2.8%) ranked low, underperforming the food and beverage sector and the broader market.

The market value of the food and beverage sector increased from January to October 2020, more due to the increase in valuation. The PE of food and beverages from January to October 2020 increased by 35% compared with the end of 2019, and the net profit in 2020 is expected to increase by 17%. The two work together, and the market value of the sector has increased by 57% year-to-date. Among them: the valuation of liquor has increased by 38% year-on-year, and it is expected that the net profit in 2020 will increase by 13%, driving the market value of liquor to increase by 57%; the valuation of non-liquor will increase by 27%, and it is expected that the net profit will increase by 27% in 2020, driving the market value to increase by 61%. On the whole, the increase in the market value of the food and beverage sector since the beginning of 2020 is more contributed by the increase in valuation.

Food and Beverage stocks outperformed the market in October 2020. Since entering the fourth quarter, the food and beverage sector rose by 3.9% in October 2020, outperforming the CSI 300 by about 1.8pct, ranking sixth among the first-tier sub-sectors. In terms of molecular industries, liquor (+6.4%) performed the best, other alcohol (+4.3%) and beer (+3.9%) outperformed the food index; condiments (-1.6%), meat products (-5.7%), The soft drinks (-5.8%) sub-sector saw lower gains. We analyze the market performance in October and the recent consumption recovery, as well as the performance of the third quarterly report.

1.2. The rise and fall of individual stocks: leisure and quick-freezing performed well, and liquor and new stocks came later


Snack food and quick-frozen food performed better. Liquor and new stocks rose more recently. The biggest variable in 2020 is the impact of the epidemic. Changes in consumption scenarios have made quick-frozen foods with the demand for home stockpiling and snack foods with the attribute of "home culture" perform better. Among the top 10 stocks in the sector from January to October 2020, casual snacks and frozen foods performed well: Yanjinpu (261%) topped the list; BESTORE (238%), Anjing Foods (198%) increased second, third. New listings and IPOs performed better, such as Babi Foods (+164%) and Xianle Health (+159%). Liquor's stock price has risen recently, and Jiuguijiu (+180%), Shanxi Fenjiu (+152%), and Jinhui liquor (+148%) also ranked in the top ten.

1.3, 2020Q3 Fund’s heavy holding of food and beverage ratio rebounded


The proportion of food and beverage allocations in 2020Q3 rebounded, and the sector's gains outperformed the broader market. Judging from the fund's heavy holdings, the 2020Q3 food and beverage allocation ratio rose from 7.1% in 2020Q2 to 8.6%, showing a rebound for two consecutive quarters, similar to the 2019Q3 fund allocation ratio. In early 2020, the epidemic had a negative impact on consumption. In the middle of the year, demand recovered and consumption recovered. It is also normal for the fund allocation ratio to rebound in the third quarter. From the perspective of market performance, the 2020Q3 food and beverage board rose by 18.8%, ranking sixth in the market, outperforming the CSI 300 Index by about 8.3pct. Taking into account the mismatch of the Spring Festival time, the growth rate of performance in 2020Q4 may slow down, and the valuation of food and beverages is high, we expect that the proportion of food and beverages held by funds in 2020Q4 may be flat or slightly decreased.

From sub-industryIn terms of decomposition, the proportion of liquor held by the fund has risen from 5.5% in 2020Q2 to 6.7% in 2020Q3. Judging from the number of funds held, the fund holdings of Jiuguijiu, Shunxin Agriculture, Yanghe, Shede, Yingjia Gongjiu, Jinshiyuan, and Kouzijiao decreased, while those of other liquor companies increased. . From the perspective of changes in the fund’s holdings, there is a differentiation: the liquor companies that the fund has greatly increased its holdings include Luzhou Laojiao, Wuliangye, Yanghe Co., Ltd., Kweichow Moutai, etc., and the liquor companies that the fund has reduced its holdings include Gujing Gongjiu, Shede Shares, Yingjia Gongjiu, etc. . We see that the changes in fund positions in the third quarter have shown a relatively obvious differentiation feature, and companies with good fundamentals and stable performance are more likely to be favored by funds. In 2020Q3, the overall non-liquor food and beverage fund's heavy position ratio rose by 0.36pct to 1.90%. Except for meat products, the allocation ratios of other industries have rebounded.

Three of the fund's top ten stocks are food, consumer companies occupy the mainstream. Observing the top ten stocks with heavy holdings in the overall market in 2020Q3, food and beverages occupy three positions: Kweichow Moutai, Wuliangye, and Luzhou Laojiao. Six of the top ten heavyweight stocks are consumer companies (in addition to food and beverage companies, there are Hengrui Medicine in the pharmaceutical industry, China Duty Free in the social service industry, and Midea Group in the home appliance industry).

2. Industry: Liquor recovered significantly in the third quarter, and popular products increased


2.1. Liquor: The revenue in the third quarter increased significantly, and the follow-up improvement trend continued


In 2020Q3, the overall revenue of listed companies has accelerated significantly, basically getting rid of the impact of the epidemic and entering the normal operating track. The third quarter is the traditional peak season for liquor consumption. In addition to the delayed recovery of consumption in the first half of the year, consumer demand has grown significantly. From the channel level, channel inventory is at a low level, and in the third quarter, channel preparation for the peak season appeared to replenish inventory. From the perspective of the winery, the third quarter is an important time for whether the annual sales can be successfully completed. The internal enthusiasm and urgency of the winery are high, and more attention is paid to the third quarter compared with previous years. increase. The overall revenue performance of listed liquor companies in 2020Q3 improved significantly from the first half of the year. The overall revenue of listed liquor companies in 2020Q3 was 39.63 billion yuan, up 11.7% year-on-year. Compared with the second quarter, the rate of increase was 7.4pct.

The channel's enthusiasm for collecting payment increased, and the scale of advance receipts in 2020 Q3 increased month-on-month . The third quarter is the traditional peak season for liquor consumption. At the same time, the first half of the year is superimposed by the winery's control of channel payment and delivery, channel inventory remains low, and the enthusiasm for channel payment collection around the Mid-Autumn Festival increases. The total amount of accounts was 25.98 billion yuan, an increase of 2.62 billion yuan from the end of the second quarter.

The scale of notes receivable in 2020Q3 generally increased, and cash inflows improved significantly. Under the epidemic, the pressure on channel funds was generally tense. The wineries relaxed their policy on dealer bills until the end of September. The total bills receivable of listed liquor companies was 23.1 billion yuan, an increase of 3.5 billion yuan from the end of June. Despite the increase in bills receivable, cash inflows in the third quarter still improved significantly in line with revenue trends. From 2020Q1 to 2020Q3, the year-on-year growth rates of operating cash inflows of listed companies were -22%, -6%, and +25%, respectively. The year-on-year growth rates of net operating cash inflows were -96%, -42%, and +31%, respectively.

The product structure has been continuously upgraded, and the profitability has improved significantly. The gross profit margin of listed liquor companies (excluding Maowu) in 2020Q3 was 75%, an increase of 2pct compared with 2019Q3. Due to the impact of the epidemic on large-scale activities, the overall high-altitude advertising of listed companies with a relatively high proportion is restricted. The overall sales expense ratio of listed companies (excluding Maowu) is slightly lower than that in 2019Q3, and the net profit margin has increased significantly. The overall net profit rate of listed companies (excluding Maowu) 2020Q3 was 28%, a year-on-year increase of 3pct.

In the third quarter, the revenue growth rate of each price band increased compared with the first half of the year, and the sub-high-end price band saw the most obvious improvement in revenue and profit. On a month-on-month basis, high-end brands basically locked most of their revenue in the first quarter through early payment collection before the Spring Festival, and the impact on revenue in the first half of the year was limited, so the quarter-on-quarter rate of increase in Q3 was not obvious. The growth rates of high-end liquor revenue in 2020Q1-Q3 were +11%, +9%, and +11%, respectively, showing the resilience of demand for high-end liquor. Due to the second-end high-end positioning for higher-level banquet occasions and the high consumption in first- and second-tier cities, the consumption scene was still affected to a certain extent during the second quarter, but the impact of the epidemic in the peak season was gradually eliminated, and the demand for delayed banquets in the first half of the year was added, and the recovery speed was the fastest. . The growth rates of high-end wine revenue in 2020Q1, 2020Q2, and 2020Q3 are -12%, -12%, and +16%, respectively. Most of the high-end mass products are consumed in third- and fourth-tier cities and townships, and the revenue growth rate in the third quarter improved significantly from the previous quarter. The revenue growth rate in 2020Q1, 2020Q2, and 2020Q3 was -20%, -6%, and +15%, respectively; with Shunxin Agriculture as the The representative public ordinary liquor, the proportion of self-drinking scenes is relatively high, and the consumption scenes of gathering meals are partly converted to personal drinking. Since the second quarter, the revenue growth rate has been stable, and the revenue growth rate and net profit growth rate in 2020Q1, 2020Q2, and 2020Q3 are -1% respectively. , +9%, +5%.

High-end wines were limited by the epidemic in the first half of the year, so revenue in the third quarter The improvement is not obvious, but the prosperity is still the highest in the industry. High-end brands have already locked most of their revenue in the first quarter through early payment before the Spring Festival, so the impact on the revenue in the first quarter is limited. At the same time, the product structure of low-margin series wines has accelerated, and the gross profit margin has not changed much compared with the same period in 2019; in the third quarter of previous years, a large number of activities such as brand promotion and dealer tours were carried out. There was a year-on-year decrease, and the growth rate of net profit was generally faster than that of revenue.

The epidemic restrictions in the third quarter were basically lifted and the consumption demand was delayed in the first half of the year. The growth rate of sub-high-end revenue in the third quarter increased significantly from the first half of the year. The Mid-Autumn Festival is the traditional peak consumption season for liquor, and the consumption scenarios such as gifts and banquets are the main consumption scenarios. In addition to the recovery of delayed consumption in the first half of the year, the demand for sub-high-end consumption has increased significantly. At the same time, due to the restrictions on the launch of event activities due to the epidemic, the sales expense ratio has dropped significantly, and the net profit growth rate is faster. In 2020Q1-Q3, the revenue growth rates were -12%, -12%, and +16%, respectively, and the net profit growth rates were +5. %, -11%, +32%. The recovery trend in the third quarter is very obvious.

In the third quarter, the revenue and profit of Volkswagen's high-end liquor recovered significantly, and the Spring Festival in 2021 will still benefit significantly from the recovery of the consumption scene during the peak season. Volkswagen's high-end products are mostly sold in third- and fourth-tier cities, which are less affected by the epidemic. Provincial leaders in the region have personnel and organizational advantages. At the end of the first quarter, they launched promotional activities earlier to help channels destock. Therefore, in the second quarter There has been a significant improvement in income from the beginning, and the trend of improvement in the traditional liquor consumption season in the third quarter is more obvious. In 2020Q1-Q3, the overall revenue growth rate of Volkswagen's high-end segment was -20%, -6%, and +15%, respectively. Due to the fact that in the sales expenses of Volkswagen's high-end liquor, high-altitude advertising accounted for a small proportion, more ground activities, and more competition. Intense, in the third quarter, the winery invested heavily in market expenses to complete the annual task, the sales expense ratio generally increased, and the profit growth rate was slower than the revenue growth rate. The growth rate of net profit in 2020Q1-Q3 was -28%, - 12%, +10%.

2.2. Condiments: The growth rate is expected to fall, and the industry Maintain steady growth


2020Q3 The growth rate of revenue and profit of listed condiment companies has declined. 2020Q3 listed condiment companies (excluding Lotus Health and Xinghu Technology) achieved an overall operating income of 8.9 billion yuan, a year-on-year growth rate of 15.7%; the overall net profit attributable to the parent was 1.88 billion yuan, a year-on-year growth rate of 19.7% . The reason for the decline is that, on the one hand, the growth rate itself was at a high level, benefiting from compensatory consumption and channel replenishment in the second quarter; on the other hand, July-August was the off-season growth rate of consumption.Fall back naturally. On the whole, the increase and decline are in line with the pace of industrial development, and also in line with our previous prediction.

In terms of profitability, the gross profit margin of listed condiment companies in 2020Q3 (excluding Lotus Health and Xinghu Technology) was 40.9%, down 0.6pct year-on-year, mainly due to the financial statements of Haitian Flavor and Hengshun Vinegar. Adjusting the caliber and transferring freight into operating costs, resulting in fluctuations in gross profit margins. The overall sales expense ratio of listed companies in the third quarter was 11.1%, a year-on-year decrease of 1.5pct, which was also related to the adjustment of freight items. We observe that the net profit margin of listed condiment companies in 2020Q3 was 21.0%, a year-on-year increase of 0.7pct, and profitability continued to improve.



In 2020Q3, the profit growth rate of key condiment companies dropped month-on-month, but still maintained a normal growth rate. In terms of the five key condiment companies (Haitian Flavor, Zhongju High-tech, Hengshun Vinegar, Qianhe Flavor, and Tianwei Food), 2020Q3 Hengshun Vinegar has a net profit due to non-recurring gains and losses. After a sharp decline, non-net profit deducted basically kept pace with revenue growth. Haitian Flavor Industry and Zhongju High-tech continued to maintain stable growth. Although the growth rate of Qianhe Flavor Industry and Tianwei Food has dropped a lot, they are still at a relatively fast level in the condiment industry. The net profit margins of the five key companies in 2020Q2 have all increased. Apparently, it is mainly due to the decline in the sales expense ratio. In fact, it is the result of a combination of gross profit margin and expense ratio.

The impact of the epidemic has basically been eliminated, and the sales of condiments in the fourth quarter will remain normal. At the beginning of 2020, the epidemic had a greater impact on the catering industry. At present, with the epidemic under control, the negative impact has been basically eliminated, and the recovery of consumption has driven the industry to continue to pick up. Although the growth rate of the industry dropped in the third quarter, the growth rate should be accelerated quarter by quarter in July, August and September. Looking forward to the fourth quarter, terminal demand has basically returned to normal, and it is estimated that most companies should be able to achieve their full-year goals.


Seasoning 2021 The performance of listed companies is likely to be high and then low. The negative impact of the epidemic is mostly manifested in the first quarter of 2020. Benefiting from the low base effect and the mismatch of the Spring Festival time, the performance of listed companies in 2021Q1 is likely to be at a high level. If the whole year is flattened, the company should maintain steady growth. The epidemic has accelerated the reshuffle of the industry, and leading companies have strong anti-risk capabilities, and their market share will continue to increase. We judge that the company's overall performance will grow steadily in 2021, and the rhythm may fluctuate from quarter to quarter.

2.3. Dairy products: rising raw milk prices and slowing industry competition increase. With the epidemic under control, the demand of the dairy industry has recovered, and the performance of sub-industry categories has been differentiated: (1) White milk: Consumers' awareness that dairy products can improve human immunity has increased, and the Mid-Autumn Festival and National Day double festivals The demand for superimposed gifts has recovered, the demand for white milk is strong, the sales are good, and some areas are out of stock. For example, Jindian achieved double-digit growth in 2020Q3. (2) Room temperature yogurt: The volume of room temperature yogurt is relatively large, and the growth rate has slowed down since 2019. In 2020, due to the impact of the epidemic, consumption scenarios decreased and the industry declined slightly. From the perspective of listed companies, the revenue of A-share listed dairy companies in 2020Q3 increased by 11.3% year-on-year, and the net profit increased by 30.2% year-on-year.

Under the tight supply and demand, the price of raw milk shows an upward trend. The price of raw milk on October 21, 2020 was 4.0 yuan, up 3.9% year-on-year, and down 0.6% month-on-month; on October 20, 2020, the winning bid price of whole milk powder was US$3,037/ton, down 3.1% year-on-year and month-on-month down 0.1%. As the demand for dairy products continues to increase, the supply and demand of raw milk is still tight. It is expected that the price of raw milk may increase by 3-5% year-on-year in 2020. From a long-term perspective, the current dairy cow inventory in China is still relatively low, the converted price of whole milk powder is higher than the domestic raw milk price, the supply and demand of raw milk is tight, and the price of raw milk will continue to rise moderately.

Dairy product enterprises slowed down their investment in buying gifts and promotions during the upswing of raw milk, and industry competition became more rational. 2020Q3 raw milk supply and demand are tight, raw milk prices are rising, such as Yili 2020Q3The cost of raw milk increased by 6-7%, and the cost of raw milk of the new dairy industry increased by small single digits. During the period when the price of raw milk was rising moderately, the competition in the industry became more rational, and the investment in the promotion of purchasing gifts by dairy companies slowed down. Yili's 2020Q3 sales expense ratio decreased by 1.4pct year-on-year to 20.4%. Looking forward to 2021, it is expected that raw milk prices will remain in a moderate upward cycle despite the tight supply of raw milk. Dairy companies are less willing to buy gifts and promote, and industry competition will slow down.

The leading position in dairy products is stable and the market share continues to increase. Leading dairy companies have strong channel, product, and brand power, and are limited by the impact of the epidemic, while small and medium-sized dairy companies are under greater pressure. Leading companies can gain market share, and industry concentration continues to increase. According to Nielsen data, in 2020Q3, Yili's market share increased steadily, the market share of room temperature milk increased by 0.8pct to 38.8% year-on-year, and the market share of low-temperature milk increased by 0.2pct to 15.2% year-on-year.

The revenue and net profit of national dairy companies have grown steadily, and local The revenue and net profit of dairy enterprises grew rapidly. According to the scale of dairy companies and the size of their operating regions, the revenue of national dairy companies (Yili shares) in 2020Q3 increased by 11.1% year-on-year; the raw milk price rose and the gross profit margin was under pressure, but the scale effect was reflected, and the sales expense ratio The decline made the company's net profit increase by 23.7% year-on-year, and the net profit margin was 8.5%. Regional dairy companies (Bright Dairy, New Dairy, Sanyuan Shares) 2020Q3 revenue increased by 10.6% year-on-year, net profit increased by 62.9% year-on-year, and net profit margin was 2.6%. Among them, the new dairy industry's school milk and milk delivery channels have resumed, and the low-temperature milk business has recovered, so that the company's revenue still increased by 6-7% after excluding the impact of Huanmei Dairy and Auscow Dairy, and the revenue improved significantly. Regional dairy companies (Yantang Dairy, Kedi Dairy, Tianrun Dairy) 2020Q3 revenue increased by 34.1% year-on-year, net profit increased by 235.4% year-on-year, net profit margin was 10.4%, and revenue and net profit grew rapidly.

Recommended Yili, the leader in promoting the platform strategy, with a stable moat and a steady increase in market share. Yili's brand and channel advantages are stable, and its market share continues to increase. The company adopts a strategy of diversification and globalization: starting from dairy products in terms of diversification, and gradually testing water plant protein beverage selection, energy drink Huanxingyuan, cheese, drinking water, dairy light drinks, coffee, milk tea, mineral water, etc. For other businesses, new businesses can contribute new impetus in the future; in the globalization, the acquisition of Thailand ice cream company Chomthana, New Zealand veteran company Westland, etc., will accelerate the layout of the Southeast Asian market. The company plans to acquire Zhongdi Dairy to further improve the milk source layout, launch a long-term service plan to enhance the enthusiasm and cohesion of the team, and further strengthen its long-term core competitiveness. In the long run, Yili still has allocation value, benefiting from increased concentration, product diversification and expansion, and global development. Under the strong demand for dairy products, it is expected that the supply and demand of raw milk will be tight, and the competition in the industry will slow down; under the scale effect, the expense ratio may decline, and the company's performance will be highly flexible, and it is likely to achieve the annual equity incentive target.

2.4. Meat products: Costs are falling, and meat products are highly elastic


2020Q3 industry revenue and net profit increased steadily. As the epidemic is brought under control and market demand gradually recovers, listed meat products companies achieved revenue of 34.54 billion yuan in 2020Q3, a year-on-year increase of 17.9%; net profit of 2.38 billion yuan, a year-on-year increase of 38.4%. Among them, in 2020Q3, Shuanghui developed a large amount of imported low-priced meat, increased the delivery of frozen products, increased the slaughter ton price, and increased slaughter revenue by 14% year-on-year; the pig price fell and the bonus of price increase was released. .

The number of live pigs gradually recovered, and the number of live pigs slaughtered improved month-on-month. The number of live pigs gradually recovered, and the number of live pigs in September 2020 increased by 20.7% year-on-year. With the recovery of live pig inventory, the slaughtering volume of live pigs has gradually improved. The slaughtering volume of live pig slaughtering enterprises in 2020Q3 was 36.353 million heads, a year-on-year decrease of 17.9%, and the decline rate narrowed. The impact of African swine fever continued to cause the slaughter volume of Shuanghui Development to decrease year-on-year in 2020Q3, but with the recovery of the stock, the slaughter volume in 2020Q3 improved month-on-month.Looking forward to 2021, the company can still import a large amount of low-priced meat to ensure the stability of the profitability of the slaughtering business. Looking forward to the long-term, after the outbreak of African swine fever, the government has strengthened the control of the slaughtering industry, which will help to further increase the concentration of the slaughtering industry in the long run.

Farming continued to recover, and pig prices showed a trend of high and then low, and gradually entered a downward cycle. On October 23, 2020, the price of live pigs was 29.7 yuan/kg, -27.6% year-on-year and -0.5% month-on-month; pork prices were 47.7 yuan/kg, -14.8% year-on-year and -1.1% month-on-month, and pig prices fell. In 2020, the African swine fever epidemic prevention ability will be enhanced, and the profitability of pig farming will be high. With the support of national policies, farmers are highly motivated to breed pigs, and pig farming will continue to recover. Since 2020H2, pig prices have gradually entered a downward cycle.

The volume and price of meat products business increased, and the price increase bonus was superimposed. The price of pigs is falling, and the profit elasticity is relatively large. In 2020Q3, the meat product business of Shuanghui, the leader, increased in both volume and price. The sales volume of meat products increased by 2.3% year-on-year, the ton price of products increased by 11%, and the operating profit increased by 10% year-on-year. The improvement in the meat products business was mainly due to the effect of price increases in 2019, the upgrade of product structure and the decline in pork prices for the main raw material cost. Looking forward to 2021, it is expected that the cost of raw materials will still show a downward trend. With the expansion of the scale, it is expected that the profit per ton of meat products will still show an upward trend, and the profit elasticity of the meat product business will still be relatively large.

The leading Shuanghui develops and distributes the breeding industry, forming an industrial closed loop. Shuanghui Development plans to adopt the self-reproduction and self-raising method to deploy the breeding industry, and increase the self-raising ratio of live pigs from 6% to 30% in the next few years. After building an industrial closed loop of breeding, slaughtering, meat product processing and sales, the company can further smooth cost fluctuations, enhance industrial synergies, and improve the profitability of slaughtering and meat products business. Shuanghui has a high dividend rate and is a stable value investment target.

2.5. Beer: The demand for beer in the third quarter returned to normal, and the industry was in danger throughout the year

The demand for single-season beer in the third quarter returned to normal. The performance of the beer sector in the third quarter was basically in line with our judgment in the semi-annual summary: revenue increased slightly, and profits still showed a certain elasticity. Specifically, the single-quarter revenue of the 2020Q3 beer sector increased by 7.43% (a slowdown from the previous quarter in 2020Q2), and the net profit attributable to the parent increased by 7.8% (the growth rate of net profit attributable to the parent after deducting non-recurring gains and losses should be higher, mainly because the base of Chongqing in 2019Q2 has higher non-recurring P&L impact).

The sales volume of beer in the third quarter decreased slightly, but the sales volume of faucets increased slightly, and the pattern showed a trend of concentration. In 2020Q3, the overall output of the industry fell by 3.3%, demand gradually returned to normal, and the industry's compensatory and restorative growth temporarily came to an end. However, demand still presents some new structural characteristics. First, the proportion of household consumption and canning consumption has increased. In the first half of 2020, due to the impact of the epidemic, the downstream catering industry has undergone major adjustments, which will affect the demand for beer on-the-spot consumption, but household consumption The starting quantity quickly makes up for the loss of food and beverage consumption. Second, the pattern shows a trend of concentration. This round of drastic adjustment of the downstream demand structure, on the one hand, the leader shows stronger anti-risk ability and flexibility, adjusts the market and promotion strategies in a timely manner to win back sales, from the perspective of the third quarter The differentiation of the industry is more obvious, and the sales volume of leading brands has basically increased slightly. We think it is mainly caused by the squeeze of small local brands.

Gross profit margins of leading companies continued to improve. The gross profit margin of beer taps in 2020Q3 continued to improve year-on-year. We believe that there are three main reasons: 1) The price contribution brought by structural improvement, the continued improvement of tap product structure and the increase in the proportion of filling products; 2) Packaging materials and labor Costs have decreased, and the cost of packaging materials has been basically stable and slightly decreased compared to the same period in 2019. At the same time, benefiting from social security and other expenses reductions, labor costs have decreased; 3) The scale effect of the faucet has improved, and the overall sales volume of the faucet has continued to increase to enhance the scale effect.

The lower level of superimposed sales expense ratio increases profit elasticity. 2020 was originally a sports competition year, but due to the impact of the epidemic, the budget for advertising, marketing and other expenses at the beginning of the year was not implemented. At the same time, because the impact of the epidemic situation has eased, the leading players have been cautious in their investment. The overall expense ratio level continued to decline in the third quarter.

The performance for the year was near misses, and the performance for the year is still relatively flexible. Benefiting from the rapid domestic epidemic control, the demand for beer has recovered rapidly. With the demand weakening in the fourth quarter, the first three quarters have basically laid the foundation for the performance of the whole year. On the whole, the sales volume of leading companies in the whole year increased slightly. Benefiting from structural improvement, cost reduction and control of sales expenses, the performance of the year is still relatively flexible.


3. Focus Individual stocks: performance is the most important, and the leader is better


3.1. Kweichow Moutai: Moutai has a stable performance, and the high growth trend of direct sales channels continues

In the first three quarters, the company achieved revenue of 69.58 billion yuan, a year-on-year +9.6%, and net profit attributable to the parent was 33.83 billion yuan, a year-on-year +11%; of which 2020Q3 revenue was 23.97 billion yuan, a year-on-year +7.3%, The net profit attributable to the parent was 11.20 billion yuan, a year-on-year increase of 6.6%.

The high growth trend of direct sales channels continued, and Moutai's revenue achieved steady growth in the third quarter. 2020Q3 Moutai achieved revenue of 20.88 billion yuan, a year-on-year increase of 9.7%. We expect the volume confirmed in the third quarter to be similar to the same period in 2019, and the increase in ton price will contribute more to revenue growth. In terms of sub-channels, the direct sales channel achieved revenue of 3.28 billion yuan, a year-on-year increase of 118%. In 2020, the establishment of direct sales channels has been gradually improved, and the proportion of direct sales has continued to increase. The series of wines achieved 2.35 billion yuan, a year-on-year decrease of 1.4%. In 2020, the product structure and distributor structure are in the optimization period, which will slightly drag on the overall revenue. Looking forward to 2021, the series of wines may return to the growth track after the adjustment is completed, and Moutai is likely to continue its steady growth trend.

The advance receipts are not volatile and the cash flow is good. At the end of the third quarter, the company's contract liabilities were 9.41 billion yuan, down 50 million yuan from the end of the second quarter, with little change. The cash received from the sale of goods was 24.9 billion yuan, which basically matched the income. The net cash flow was 12.49 billion yuan, a year-on-year increase of 9.26 billion yuan, mainly due to the significant decrease in deposits from banks in the third quarter of 2019.

The gross profit margin and period expense ratio were stable, and the increase in business tax ratio resulted in a slight decrease in net profit margin. In 2020Q3, the company's gross profit margin increased by 0.2pct over the same period of time. The production cost of packaging materials and other materials increased during the epidemic, and the freight was adjusted from sales expenses to cost items, resulting in a significant increase in ton price, but the increase in gross profit margin was not obvious. The sales rate was 2.56%, down 0.2pct year-on-year, the management expense rate was 6.59%, up 0.2pct year-on-year, and the financial expense rate was 0.82%, down 0.83pct year-on-year, mainly due to the increase in interest income from commercial bank deposits. The business tax ratio was 15.9%, a year-on-year increase of 1.6pct, which dragged down the net profit margin. The net profit margin was 46.89%, a year-on-year decrease of 0.14pct.

The performance growth is highly certain, and the growth path is clear. Maintain the "Buy" rating. In 2020, the company adheres to the goal of "unchanged plans, unabated tasks, unadjusted indicators, and unabated revenue", considering the increase in the amount of direct sales channels, the increase in the proportion of personalized products, and the high certainty of revenue growth. It is expected that the EPS in 2020-2022 will be 36.83 yuan, 43.10 yuan, and 48.23 yuan, respectively, up 12%, 17%, and 12% year-on-year, respectively, maintaining the "buy" rating.

3.2. Wuliangye: The first three quarters performed well, and the reform dividends were continuously released

The company's revenue in the first three quarters was 42.49 billion yuan, a year-on-year increase of 14.5%. The parent's net profit was 14.55 billion yuan, a year-on-year increase of 16.0%; in 2020Q3, the revenue was 11.73 billion yuan, a year-on-year increase of 17.8%, and the net profit attributable to the parent was 3.69 billion yuan, a year-on-year increase of 15.0%.

The growth rate of high-end Wuliangye was higher than the overall performance, and the revenue side performed well. We judge that the revenue growth rate of high-end Wuliang in Q3 is higher than the overall growth rate, and the volume increase is the main driving force. Since the second quarter, Wuliangye has systematically launched a series of policies and measures to stabilize the market and growth, to seize consumer demand, further promote the continuous and stable increase of prices in the general five market, and achieve high-quality sales. The series of wines have accelerated investment promotion, and the third quarter is expected to accelerate compared with the first half of the year.

The quarter-on-quarter increase in advance receipts and the increase in bills receivable dragged down cash flow performance. The company's advance receipts at the end of the second quarter decreased by 1.1 billion yuan from the previous quarter, mainly due to the relatively high repayment of dealers at the beginning of the year, superimposed on JuneAt the end of the year, the company reduced the quota of traditional channels, and it is reasonable for the dealers to reduce the payment at the end of the second quarter. Due to the discounting of bills receivable and the conversion of accounts receivable financing into cash, the cash received from sales in Q2 was 15.9 billion yuan, a year-on-year increase of 55.1%, and the net operating cash flow was 2.37 billion yuan, a year-on-year increase of 439.5%.

In 2020Q3, the gross profit margin increased, the proportion of minority shareholders' equity increased, and the net profit margin decreased slightly. 2020Q3 gross profit margin increased by 0.71 pct to 74.51%, which is expected to be mainly related to structural improvement, tax ratio increased by 0.65pct to 14.05%; management expense ratio decreased by 0.37pct to 4.93%, minority equity ratio increased by 1.03%, Q3 net Interest rates slipped slightly by 0.77pct to 31.47%.

The company's reform dividends continue to be released, and the long-term development potential is sufficient. The "Buy" rating is maintained. In 2020, the company will take precise measures and actively respond to the epidemic, and the reform will continue to deepen. There will still be reform measures gradually implemented in the future: the company has guided the vigorous development of group buying at the end of June, and it is progressing well; at the product level, it plans to launch 2000-3000 yuan products , to enhance the brand image, which is of great strategic significance; the series of wines have basically been sorted out, and the follow-up recovery is more flexible. We are optimistic about the company's long-term development potential. It is estimated that the EPS in 2020-2022 will be 5.19 yuan, 5.97 yuan, and 7.12 yuan, respectively, up 16%, 15%, and 19% year-on-year, and maintain a "buy" rating.

3.3. Shanxi Fenjiu: The peak season transitions smoothly, and the annual target is expected to be achieved

The revenue in the first three quarters was 10.37 billion yuan, a year-on-year increase of 13.1%, attributable to The parent's net profit was 2.46 billion yuan, a year-on-year +43.8%; of which 2020Q3 revenue was 3.48 billion yuan, a year-on-year +25.1%, and the parent's net profit was 856 million yuan, a year-on-year +69.4%. Performance exceeded expectations.

Blue-and-white and glass-fen worked together to accelerate the overall speed outside the province. In terms of products, the revenue of Fenjiu series in 2020Q3 was 3.14 billion, a year-on-year increase of 33%, mainly driven by glass Fen and blue and white. The series wine achieved revenue of 120 million in 2020Q3, and the group's products were greatly reduced. The revenue of the series wine fell by 43% compared with the same period of last year. The revenue of the prepared wine was 200 million in the first half of the year, a year-on-year increase of 25%. The reform effect of Zhuyeqing Company is beginning to show. In 2020Q3, the company's revenue in the province was 1.51 billion, an increase of 14% year-on-year, and the revenue in the non-provincial market was 1.95 billion, a year-on-year increase of 39%. Both the province and the province were significantly faster than the first quarter, and the speed outside the province was more dazzling. The company is nationalized Process continues.

The advance receipts increased significantly at the end of the third quarter, and the increase in bills dragged down the cash flow performance. The advance receipts at the end of the third quarter increased by 540 million to 2.69 billion yuan from the previous quarter, exceeding the added value of advance receipts of 180 million yuan over the same period in 2019, and the channel and payment collection were highly motivated. Due to the increase in the proportion of dealers paying by bills, the company received 2.9 billion yuan in cash from sales of goods and labor services in 2020Q3, slightly lower than the revenue recognized value.

Gross profit margin and net profit margin both increased, and the increase in net profit margin is a long-term trend. In 2020Q3, the company's gross profit margin increased significantly by 9pct year-on-year to 73%. On the one hand, due to the price increase of glass fen and blue and white in the first half of the year, on the other hand, in 2019Q3, the single-quarter gross profit was mainly due to the rapid growth of low- and medium-priced liquor such as glass fen and prepared wine. Interest rate base is low. The sales expense ratio increased by 6pct year-on-year to 16.7%. On the one hand, due to the promotion of more banquets, order fairs and other promotional activities in the third quarter, on the other hand, the sales expense ratio in the single quarter of 2019Q3 was low. The business tax and surcharge ratio, management expense ratio, and financial expense ratio did not change significantly year-on-year, and the gross profit margin increased significantly, resulting in a 5pct year-on-year increase in the single-quarter net profit margin to 24.8%. Looking forward, the sales expense ratio is expected to remain stable. With the implementation of the company's single product price increase and the development of blue and white, the increase in gross profit margin and net profit margin is a long-term trend.

The company's growth path is clear, and the growth rate is still fast. Maintain "Buy" rating. The company's brand heritage is profound, the internal market-oriented reform continues, the high-end blue and white volume and the potential energy of glass are accelerated, the nationalization continues to advance, and the growth rate is still fast. It is estimated that the 2020-2022 EPS will be 3.14 yuan, 3.85 yuan, and 4.69 yuan, respectively, up 41%, 23%, and 22% year-on-year, and maintain the "buy" rating.

3.4. Yanghe Co., Ltd.: The revenue in the third quarter accelerated as scheduled, and the operating inflection point is gradually approaching



The company's revenue from January to September was 18.91 billion yuan, a year-on-year decrease of 10.3%, and the net profit attributable to the parent was 7.19 billion yuan, a year-on-year increaseAmong them, the revenue in 2020Q3 was 5.48 billion yuan, a year-on-year increase of 7.6%, the net profit attributable to the parent was 1.76 billion yuan, a year-on-year increase of 14.1%, and the net profit attributable to the parent after deduction was 1.37 billion yuan, a year-on-year increase of 2.2%.

Basically passed the adjustment period, and the revenue in the third quarter accelerated as scheduled. In the first half of the year, the company continued to control the rhythm of payment collection and delivery. In the third quarter, channel inventory was low, combined with the recovery of mid-autumn demand, and M6+ stores outside the province. The third quarter achieved positive growth for the first time since the adjustment. At the end of the third quarter, the company's contract debt balance was 3.87 billion yuan, a decrease of 80 million yuan from the previous quarter. The reason was that the company did not require the channel to collect payment and suppress the goods in the third quarter, and the channel currently has low pressure and high flexibility. In the third quarter, the company received 5.7 billion yuan in cash from sales of goods, which is basically consistent with the scale of revenue recognition.

2020Q3 saw a large increase in investment income, which contributed significantly to the increase in net interest rate. The company's gross profit margin in 2020Q3 was 73.16%, a slight decrease of 0.78pct year-on-year. The reason for the analysis was the increase in discounts for new product promotion. The sales expense ratio, management expense ratio, business tax ratio, and financial expense ratio did not change significantly year-on-year, which were normal fluctuations during the operating period. Research and development expenses were 2.55%, an increase of 2.4pct over the same period, due to the increase in investment in new research and development projects in the current period. In 2020Q3, the company achieved a net income of 326 million yuan from changes in fair value, an increase of 238 million yuan year-on-year, which contributed greatly to the increase in net profit margin, with a net profit margin of 32.54%, a year-on-year increase of 1.96pct.

The bottom of the business has been established, and it is expected that in 2021, each product series will gradually enter the normal track. At present, the inventory of Haizhilan and Tianzhilan is low, and the price has rebounded in an orderly manner. In 2021, it will enter a period of recovery and growth; M6+ has injected various core resources of the company, and the operation idea is correct. The current market feedback is good, and it will enter the market in 2021. Rapid development period; M3+ is expected to be launched within this year, and it will basically be implemented in accordance with the operation ideas of M6+, with a high probability of success, and it is expected to see results in 2021.

The company's reforms continue to advance, and the income improvement flexibility is large, and the "overweight" rating is maintained. With the success of M6+'s place occupation and the rationalization of channel interests, the company's brand power and development track will reach a new level. It is expected that the company's EPS in 2020-2022 will be 5.11 yuan, 5.76 yuan, and 6.62 yuan, respectively. The current share price corresponds to PE of 33, 29, and 25 times, respectively, maintaining the "overweight" rating.

3.5. Gujing Tribute Liquor: The performance in the peak season lived up to expectations and made every effort to catch up with the target set at the beginning of the year

The company achieved revenue of 8.07 billion yuan in the first three quarters, a year-on-year increase of -1.6%, the net profit attributable to the parent was 1.54 billion yuan, a year-on-year -11.7%, and the non-attributable net profit to the parent was 1.50 billion yuan, a year-on-year -6.8%; of which 2020Q3 revenue was 2.55 billion yuan, +15.1% year-on-year, and the net profit attributable to the parent was 510 million yuan, year-on-year +3.9%, with a net profit of 490 million yuan after deducting non-return to the parent, +11.0% year-on-year.

In the third quarter, the revenue recovered rapidly, and the peak season performance in the province was even better. In terms of different regions, the Yellow Crane Tower accounts for a relatively large proportion, and it is expected that it will still decline in the third quarter. In the third quarter, the sales of banquets were relatively strong, and the gift wine market partially recovered. The products of ancient 8 and above increased significantly, and the contribution was mainly increased.

The advance receipts increased month-on-month, and the progress of payment collection was slower than the same period in 2019. At the end of the third quarter, the advance receipts increased by 120 million yuan month-on-month, the actual payment progress was higher than the statement revenue recognition value, the market outside the province was greatly affected, and the added value of advance receipts decreased by 250 million yuan compared with the same period, indicating that in 2020 The progress of payment collection is slower than the same period in 2019.

The sales expense ratio increased significantly in the quarter, and the net profit margin was under pressure in the short term. 2020Q3 gross profit margin was 75.5%, a year-on-year increase of 0.3pct, business tax ratio was 15.8%, a year-on-year increase of 0.4pct, management expense ratio was 6.7%, a year-on-year decrease of 0.3pct, and sales expense ratio was 29.4%, a year-on-year increase of 3.6pct. Due to the preemptive consumption recovery in the third quarter and the increase of market expenses such as banquets, the sales expense ratio increased rapidly in a single quarter, resulting in a year-on-year decrease of 1.1pct to 20.1% in net profit margin. Looking forward to 2021, the product structure upgrade will continue, the market investment will weaken month-on-month after the demand stabilizes, and the company's net profit margin will increase as a long-term trend.

The company's marketing management level is outstanding, the growth path is clear, and the recovery flexibility is large in the later period, maintaining the "overweight" rating. From a long-term perspective, the company, as one of the eight famous wines, hasThe level is outstanding, there is ample room for continuous upgrading and growth of products in the province, the expansion trend outside the province continues, and the growth path is clear. Looking forward to the fourth quarter to 2021, with the recovery of demand in the province and Hubei, the recovery is more flexible. It is estimated that the company's EPS in 2020-2022 will be 4.45 yuan, 5.35 yuan, and 6.30 yuan, respectively, maintaining the "overweight" rating.

3.6. Kouzijiao: increased investment in the market and significant improvement in revenue in the third quarter

The company achieved revenue of 2.69 billion yuan in the first three quarters, down 22.5 percent year-on-year %, the net profit attributable to the parent was 860 million yuan, a year-on-year decrease of 33.4%; of which 2020Q3 revenue was 1.12 billion yuan, a year-on-year increase of 6.8%, and the net profit attributable to the parent was 380 million yuan, a year-on-year decrease of 5.9%.

In the third quarter, revenue returned to positive growth, with outstanding growth outside the province. The company insisted on destocking in the first half of the year and entered the third quarter with low inventory. In the context of the low base in the third quarter of 2019, with the recovery of demand during the Mid-Autumn Festival, and since the beginning of the year, the company has increased resources for group purchases and banquets, and the growth rate of revenue in the third quarter has improved significantly. The company's advance receipts at the end of the third quarter increased by 50 million yuan from the end of the second quarter, and the actual situation of dealers' collections is also better than the statement. From a regional perspective, in 2020Q3, the revenue in the province was 850 million, a year-on-year increase of 3%, and the revenue outside the province was 260 million, a year-on-year increase of 27%, showing a better performance. In terms of products, in 2020Q3 high-end, mid-range, and low-end liquor achieved revenue of 1.08 billion yuan, 20 million yuan, and 20 million yuan, respectively, up 9%, -25%, and -19% year-on-year. The trend of product upgrading is obvious.

Gross profit margin increased, and the period expense rate increased even more. On the whole, the net profit margin decreased. The company's 2020Q2 gross profit margin was 76.7%, a year-on-year increase of 6.3pct, mainly due to the recovery of high-end products in the second quarter and the improvement of product structure, which continued to the third quarter. Due to the significant increase in advertising expenses, the sales expense ratio increased by 6.8pct year-on-year to 12.5%, the administrative expenses increased by 0.4pct year-on-year to 5.1%, and the business tax ratio increased by 0.7pct year-on-year to 15.2%. Overall, the company's net profit margin was 32.1%, down 5.2pct over the same period. The company's net interest rate has always been at a high level in the industry. With the subsequent increase in the company's market investment, the net interest rate may fluctuate.

The company's reforms continue to advance, and the income improvement flexibility is large, and the "overweight" rating is maintained. The company is the second-largest brand in the province, with a strong brand, stable relationship with manufacturers, and a solid consumer base. It still has considerable competitive strength. We are optimistic about the company's resilience in the second half of the year. The EPS from 2020 to 2022 are 2.71 yuan, 3.20 yuan, and 3.63 yuan, respectively. The current stock price corresponds to PE of 22, 19, and 16 times. Kouzijiao has a valuation advantage in the liquor industry, and maintains an “overweight” rating.

3.7. Yili: Slowing competition, improving expense ratio, and high performance flexibility

The growth rate of room temperature yogurt slowed down, and white milk increased faster. 2020Q3 liquid milk, milk powder, and cold drinks business increased by 9.6%, 18.7%, and 1.2% respectively. In terms of categories: (1) 2020Q2 dealer replenishment, the impact of 2020Q3 replenishment is weakened, the growth rate of room temperature yogurt slows down, and Anmuxi achieves positive growth; (2) The Mid-Autumn Festival and National Day are superimposed, and consumers are more immune to dairy products The awareness of power consumption has increased, the demand for white milk is strong, and some areas are out of stock, and Jindian has double-digit growth; (3) Westland contributed milk powder revenue on a consolidated basis; (4) The growth rate of low-temperature dairy products was basically flat. Annual revenue growth is expected to reach 8%.

The increase in net profit margin was mainly due to the decrease in selling expense ratio. 2020Q3 net profit margin increased by 0.9pct to 8.7%. Gross profit margin decreased by 1.2pct to 34.9% mainly due to: (1) 2020Q3 raw milk supply and demand were tight, and raw milk costs increased by 6-7%; (2) Westland's early production efficiency was low. The sales expense ratio decreased by 1.4pct year-on-year to 20.4%, mainly due to: (1) the scale effect continued to manifest; (2) the company controlled the cost input, and the cost input efficiency was improved. Looking forward to the whole year, the company can ease the upward pressure on costs by upgrading product structure and slowing down promotion investment; the expense ratio may decline due to the scale effect, and the growth rate of net profit in 2020 is expected to be about 7.6%.

The supply and demand of raw milk is tight, and the company actively deploys upstream milk sources. The number of dairy cows in my country continued to decline, while the demand for dairy products continued to increase, and the upstream raw milk supply and demand were tight. Yili Co., Ltd. is actively deploying upstream milk sources, and plans to make an offer to acquire Zhongdi Dairy, which can further enhance its control over upstream milk sources, ensure the supply of raw milk, and smooth the upward pressure on raw milk. exhibitionLooking forward to the future, with the tight supply and demand of raw milk, the industry competition will slow down, the company's gross sales may continue to increase, and its performance will be more flexible. It is highly likely that the annual equity incentive target can be achieved.

Investment suggestion: The trend of increasing concentration will remain unchanged. The company strengthens its own channel thrust and product competitiveness, and its share can still be expanded. From 2020 to 2022, the company's net profit attributable to the parent company is expected to be 7.46 billion, 8.23 ​​billion, and 9.34 billion, respectively, and the EPS will be 1.23, 1.35, and 1.53 yuan, respectively, maintaining the "buy" investment rating.

3.8. Development of Shuanghui: Steady growth of slaughtering under Sino-foreign cooperation, release of flexibility in meat products business



The company exerts synergies between China and foreign countries, and low-priced imported meat promotes slaughtering revenue and profit growth. 2020Q3 fresh meat sales decreased by about 6% year-on-year, and the decline in fresh meat sales was mainly due to the high base in the same period in 2019. The company increased the delivery of frozen products and imported low-priced meat, and the sales volume of imported meat nearly doubled, resulting in a 2020Q3 ton price increase of 21.4% year-on-year, resulting in a 14% year-on-year increase in the slaughtering department revenue and a 3% increase in departmental profit. Looking forward to 2021, the company can still import a large amount of low-priced meat to ensure the stability of the profitability of the slaughtering business. In the long run, with the exit of small and medium-sized slaughtering enterprises, the company's slaughtering market share will continue to increase, and the slaughtering business can be further improved.

The price increase bonus releases the superimposed cost down, and the profit of meat products is more elastic. 2020Q1-Q3, the company's total sales volume of fresh frozen pork, chicken and packaged meat products was 2.31 million tons, a year-on-year decrease of 2.9%. Among them, the sales volume of poultry products in 2020Q3 increased by 17.3% year-on-year, and the sales volume of meat products increased by 2.3% year-on-year. The main reasons for the increase in sales volume: (1) Core products performed well, such as Wang Zhongwang, which increased by 13.8% year-on-year; (2) Consolidated old channels and developed new channels, and new channels such as e-commerce, catering, and new leisure professional customers grew rapidly. The revenue of meat products in 2020Q3 was 7.73 billion yuan, an increase of 13.4%, and the ton price of products increased by 11%. The operating profit of meat products was about 1.61 billion yuan, an increase of 10%, and the profit per ton increased by about 7.5%. The main reasons for the better profitability of the department: (1) In 2019, the product price increase still released some dividends; (2) The product structure continued to upgrade, such as the proportion of premium products increased by 3.5pct year-on-year, and the proportion of new product sales increased quarter by quarter; (3) The price of pork, the main raw material cost, fell. The main reason for the slight month-on-month decrease in the profit tonnage of meat products: the company used part of the profit to improve product quality and increase market input. Looking forward to 2021, it is expected that the cost of raw materials will still show a downward trend. With the expansion of the scale, it is expected that the profit per ton of meat products will still show an upward trend, and the profit elasticity of the meat product business will still be relatively large.

Investment advice: We estimate that the company's net profits attributable to the parent in 2020-2022 will be 6.65 billion, 7.75 billion, and 8.30 billion yuan, respectively, and the EPS will be 1.92, 2.24, and 2.4 yuan, respectively. The company's profits are highly elastic and the dividend rate is high. It is the target of stable value investment and maintains the "overweight" rating.

3.9. Haitian Flavor Industry: The performance is in line with expectations, and the leader is stable.



The revenue growth rate was slightly higher than expected, and the mission objectives were completed in a rhythm. Haitian Flavor achieved a 17.7% increase in revenue in the third quarter. Although the growth rate of demand in the off-season has dropped normally, the growth rate is higher than the annual target level. In terms of categories, the three major categories in 2020Q3 achieved a total growth of 17.1%, of which soy sauce, oyster sauce, and sauces increased by 15.2%, 21.8%, and 12.4% respectively. The strategy is very effective. In the third quarter, the central, northern and southern regions achieved rapid growth of more than 20%, making up for the lack of growth in the southern region (4.1%) and the eastern region (12.6%). On the whole, 75% of the annual target was completed in the first three quarters, and the tasks were basically completed in rhythm. At the end of the third quarter, there was no significant change in advance receipts from the previous quarter, and the channel inventory was basically in a normal state.

The adjustment of the accounts led to changes in the gross profit rate and sales expense ratio, and the overall net profit rate maintained an upward trend. 2020Q3 gross profit margin decreased by 2.9pct year-on-year, and sales expense ratio decreased by 3.1pct year-on-year, mainly due to the adjustment of shipping costs from sales expenses to operating costs. Taken together, the overall contribution to profit is still positive. The management expense ratio and financial expense ratio did not change much, the overall net interest rate increased by 0.8pct, and the profitability was further enhanced.

The multi-category expansion logic has been verified, and the leading development has been continuously improved. Under the impact of the epidemic, the leader and the strong are Hengqiang, Haitian has recovered the losses during the epidemic, and future developmentThe main logic lies in category expansion, and the logic is gradually being verified: on the product side, compound condiments represented by hot pot ingredients are already on the market, and they are using their channel advantages to distribute goods. On the channel side, the company has increased investment promotion efforts and further refined the channels, and new and old categories may be operated separately. The company's medium and long-term goals are clear, and the sustainability of leading growth has been further improved.

Profit forecast and investment advice: We maintain the profit forecast unchanged. It is estimated that the company's net profit attributable to the parent in 2020-2022 will be 6.32 billion, 7.37 billion and 8.56 billion respectively, a year-on-year increase of 18 %, 17%, 16%, EPS were 1.95, 2.27, 2.64 yuan, Haitian brand and channel advantages have existed for a long time, the company continues to strengthen its competitiveness, the market share of multi-category development can still be expanded, and it has the potential of platform enterprises. We are still optimistic about the future development of Haitian in the long-term and maintain the "overweight" rating.

3.10, Zhongju High-tech: The performance grows as expected, the outlook is optimistic

The superimposed area of ​​consumption in the off-season is unbalanced, and the growth rate of delicious and fresh in the third quarter Back down slightly. 2020Q3 Delicious Fresh's revenue increased by 12%, of which soy sauce increased by about 13%, bearing the main growth pressure; food oil increased by 12%, and small condiments increased by 11%, all maintaining rapid growth; chicken essence and chicken powder increased by 5% %, the growth rate accelerated month-on-month. From the perspective of regional distribution, the eastern and southern regions were 14.6% and 0.6% respectively in the third quarter, with a slow growth rate. Excluding the non-condiment business in the southern region, the actual southern condiment business increased by about 4.6%. There are objective reasons left over from the epidemic, and there are also subjective factors of unbalanced regional development. In the third quarter, 278 new dealers were added, a rapid growth, indicating that the company's new market development has been fruitful.

The increase in net profit was mainly due to the increase in gross profit margin and the decrease in management and financial expense ratios. 2020Q3, the company's gross profit margin of condiments increased by 2.9pct to 40.6%, mainly due to: firstly, in 2019Q3, the company promoted more market development, resulting in a lower gross profit margin; secondly, the procurement cost after control in 2020 decreased. The company's sales expense ratio increased by 0.9pct year-on-year to 9.6%, which should be due to the increase in the company's supermarket promotions and promotion expenses. Administrative expenses decreased by 0.1pct year-on-year, basically remaining stable; financial expense ratio decreased by 0.7pct year-on-year, mainly due to the increase in loan interest. Observation investment income decreased by 40% year-on-year, mainly due to the decrease in the entrusted income of the parent company and Zhongju Hechuang, which also affected the net profit. Looking forward to 2021, the increase in the company's gross profit margin may not be obvious. Channel refinement and market expansion may increase expenses. However, Baoneng's strict management is likely to bring efficiency improvements. It is expected that the growth rate of net profit of the seasoning business in 2021 may be similar to Revenue keeps pace.

The outlook is optimistic and the growth path is clear. In 2020, in the context of the impact of the epidemic, the company strives to sprint towards the goal at the beginning of the year. Looking forward to 2021, the company will grow by adjusting channels, expanding markets, and expanding categories. In terms of products, we will develop second-tier products, mainly targeting county-level markets, and reserve varieties for channel sinking and intensive cultivation; continuous refinement work on channels; at the same time, we will increase investment promotion efforts to exceed development goals. The Zhongshan plant is undergoing technical renovation. After the completion, the production efficiency is expected to be further improved, and the future growth path is clear. It is estimated that the company's net profits attributable to the parent in 2020-2022 will be 880 million, 1.06 billion, and 1.29 billion, respectively, and the EPS will be 1.10, 1.33, and 1.62 yuan, an increase of 22%, 21, and 21% year-on-year. Considering that the company's seasoning performance growth is confirmed, Baoneng Group's management empowerment has significantly improved expectations, and the investment rating of "buy" is still maintained.

3.11, Fuling mustard: performance is under pressure, prospects are promising

Channel inventory returns to normal, channel sinking brings most of the revenue Increment. In 2020Q3, the company's revenue increased by 16%, mainly due to the increase in channel sinking and intensive cultivation. It is estimated that the number of dealers in the county-level market is still growing, and at the same time, it has a high survival rate. Speed ​​should be well above average. In addition, the development of new channels such as catering and e-commerce live broadcast also contributed to some increments. In the third quarter, the channel inventory was maintained at about 5-6 weeks, and the inventory impact was not large. The market dynamic sales basically matched the reported revenue.

2020Q3 net profit increased by 3.0%, and net profit margin decreased by 4.4pct year-on-year. The main reasons were: firstly, the company’s purchase of bank wealth management products decreased, resulting in a year-on-year decrease of 17 million in investment income in the third quarter; second, gross profit margin decreased by 1.0% year-on-year pct, should be affected by the use of the high-priced Qingcaitou acquired in early 2020 in the third quarter, and the increase in cost; third, the sales expense ratio increased by 2.1pct year-on-year, which may be lower than the 2019Q3 expense ratio base, and the 2020Q3 epidemic controlIt is related to the centralized placement of manufacturing costs on the market. Taking into account the changes in channel incentives, while maintaining the stability of the channel and price system in the future, the cost utilization efficiency will also be improved. Considering the low profit base in 2019Q4, it is estimated that the profit growth in 2020Q4 is likely to accelerate, and it is expected that the company's profit margin should also increase steadily in 2021.

The fixed increase is imminent, and the prospect is promising. The company has announced the fixed increase plan, which is pending the approval of the China Securities Regulatory Commission. The major shareholder of the fixed increase plan, Fuling SDIC, and chairman Zhou Binquan plan to subscribe for a total of 1.35 billion and 80 million. The participation of major shareholders and chairman of the board shows the confidence of the company's development. The issue price has not yet been determined, and the market price may fluctuate, but the company's future development rhythm is clear. In the short term, the company's channel dividends will bring the continued growth of mustard. In the long run, the category expansion of kimchi and pickled vegetables will show a positive future trend and promising prospects. It is estimated that the net profit attributable to the parent in 2020-2022 is 7.4, 8.6, and 1.00 billion, respectively, and the EPS is 0.94, 1.09, and 1.27 yuan, an increase of 23%, 16%, and 17%, respectively. In the medium and long term, the company's channel sinking, refined management, product optimization, and category expansion can bring sustainable growth. We are optimistic about the company's future growth and suggest active deployment.

3.12. Ximai Foods: Short-term performance is under pressure, long-term growth space is large

The slowdown in revenue growth is mainly due to the discount of goods Most and part of the self-operated income will be settled in 2020Q4. The company's revenue in 2020Q3 increased by 15%, and the main reasons for the slowdown in growth were: (1) product discounts were high; (2) some self-operated income was settled in 2020Q4. Cold food oatmeal is incremental in 2020Q3. The company has more incentive measures and expenses for employees. The profit of dealers and stores and sales staff have increased, and the enthusiasm is strong. The growth rate of cold food is fast. The company has steadily developed online and offline channels, with stable growth of old products and continuous volume of new products. It is expected that the annual revenue growth rate will be about 9%.

The decline in net profit margin was mainly due to an increase in selling expenses and a decrease in gross profit margin. The company's 2020Q3 net profit margin fell by 7.8pct year-on-year to 11.6%. Gross profit margin decreased by 2.3pct year-on-year, mainly due to increased product discounts. The sales expense ratio increased by 2.9pct year-on-year mainly because the company increased its expenditure in 2020Q3 to seize market share, such as launching new product projects, and giving more cost support to its flagship products. Looking forward to the whole year, the company will still invest in promoting new products and developing channels. It is expected that the annual net profit growth rate will be about 0.5%.

The initial cost of the industry is relatively large, and in the long run, all channels will develop together and production capacity will be released one after another, which has great potential. Ximai Foods continues to deepen its offline channels, attracting consumers through on-site shopping guides, tasting activities, etc., and enhancing the sales force of single stores; launching 90g and other small package products to develop channels such as convenience stores; actively deploying online channels, testing Water new retail business. In addition, the Suqian factory has been put into operation in May 2020, and the company has sufficient hot food production capacity; the launch of the Jiangsu Ximai oat food innovation factory project can ensure the company's future cold food oat supply. At present, the cold food market is still in the period of rapid expansion, and there is no leading brand. The company needs to invest more expenses in the short term to seize market share. In the future, with the improvement of channel construction and the successive release of production capacity, the company has huge development potential.

Investment advice: The company's offline channel advantages are stable, and it is still in a stable development stage. We estimate that the net profit attributable to the parent in 2020-2022 will be 1.6, 2.0, and 240 million, respectively, and the EPS will be 0.99, 1.22, and 1.52 yuan, and maintain the "buy" rating.

3.13. New Dairy: Continued improvement in performance and steady development of the national market

Huanmei Dairy and Auscow Dairy were consolidated, with rapid revenue increase. 2020Q3 revenue increased by 39% year-on-year, mainly because the company consolidated Huanmei Dairy and Auscow Dairy. After excluding the impact of consolidation, the company's revenue increased by 6-7% year-on-year. The main reasons for the month-on-month improvement were: (1) The demand for white milk at room temperature was strong and the growth was fast; (2) With the epidemic under control, the intake of student milk and milk delivery in June The household channel has basically recovered to the level of the same period, and the low-temperature milk business has recovered. The company's revenue growth is expected to be about 15% in 2020.

The increase in net profit margin was mainly due to the increase in revenue and the decrease in sales expense ratio. 2020Q3, the company's net profit margin increased by 0.4pct to 5.5%. The main reason for the year-on-year decrease of 1.4pct in selling expense ratio: Huanmei Dairy's lower expense ratio and improved expense ratio after consolidation. In 2020Q3, the company's gross profit margin decreased by 0.7pct year-on-year to 31.2%, mainly due to: (1) the low-single-digit growth in the price of raw raw milk; (2) Huanmei Dairy's low-gross-margin room temperature milk accounted for a relatively high proportion, which was a slight drag on consolidation. Looking forward to the future, the price of raw milk is still in an upward cycle, and the new dairy industry can improve its own milk sources by: (1)(2) Improve management efficiency, reduce costs and increase efficiency; (3) Upgrade product structure; (4) Adjust product prices when necessary to ease the pressure of rising costs; sales expenses during market development The rate is expected to remain high, and the net profit growth rate in 2020 is expected to be about 16%.

Endogenous growth and extensional mergers and acquisitions go hand in hand, and steadily develop the national market. The company has completed the acquisition of Ningxia Huanmei Dairy, Fujian New Hope Auscow Dairy, and Fujian Xinao Dairy, which can further improve the layout of New Dairy in Northwest and East China. Looking ahead, with the expansion of online and offline channels, the company can maintain endogenous growth; with external mergers and acquisitions, the company can build farms faster and enter new markets. Under the combined efforts of endogenous growth and extensional mergers and acquisitions, the company's performance can grow steadily.

Investment advice: We estimate that the company's net profits attributable to the parent in 2020-2022 will be 280 million, 350 million, and 450 million, and EPS will be 0.33, 0.41, and 0.52, respectively. In the long run, endogenous growth and extensional mergers and acquisitions go hand in hand, and the performance of the new dairy industry with a strong replicable model is expected to continue to grow, maintaining an “overweight” rating.

3.14. Guangzhou Restaurant: Mooncakes and quick-freezing grew rapidly, and expense ratio improved significantly

Mooncakes and quick-frozen revenue grew rapidly, and the catering business MoM improved. In terms of business segments: (1) Food: As the epidemic is brought under control, and the Mid-Autumn Festival and National Day festivals will affect the release of demand for moon cakes, the demand for moon cakes has increased by 19% year-on-year; the quick-freezing business has increased year-on-year with the release of production capacity and the increase in market demand. (2) The catering business in 2020Q3 decreased by 9% year-on-year, and in 2020Q2, it decreased by 44.7% year-on-year, and the catering business improved. From a regional perspective: the number of dealers outside the province increased by 77 to 256, and the e-commerce channel has gradually developed, and the revenue of the market outside the province has increased by 20%; the number of dealers in the provincial market has increased by 82 to 560, and the revenue has increased by 14.3%. Looking forward to the future, with the further release of production capacity, the improvement of channel layout, the development of e-commerce channels, and the gradual recovery of the catering business, the revenue growth rate in 2020 is expected to be about 13%.

The increase in net profit margin in 2020Q3 was mainly due to the decrease in sales expense ratio. In 2020Q3, the company's net profit margin increased by 2.8pct year-on-year to 20.7%, mainly due to the decrease in sales expense ratio. Gross profit margin decreased by 3pct to 55.6%. The main reasons for the decline were: (1) Catering business with high gross profit margin was under pressure, and the proportion of revenue fell by 2.4pct; (2) Raw material costs increased. In 2020Q3, the sales expense ratio decreased by 6.9pct year-on-year to 18.7%, mainly because the company strengthened cost control due to the impact of the epidemic. Net profit growth in 2020 is expected to be about 9%.

Tao Tao Ju plans to introduce strategic investors to enhance its core competitiveness. The company promotes the reform of state-owned enterprises and plans to introduce strategic investors to Tao Tao Ju to increase its capital and share, and the capital increase is expected to be no less than 225 million yuan. After the completion of capital increase and share expansion, Guangzhou Restaurant will hold 55% of the shares in Taotaoju, and strategic investors will hold 45% of the shares. By introducing strategic investors, Taotaoju's shareholding structure can be further optimized, and the management mechanism can be marketized, which will help enhance the company's core competitiveness in the long run.

Investment suggestions: It is estimated that the company's net profits attributable to the parent in 2020-2022 will be 4.2, 5.4, and 650 million yuan, respectively, and the EPS will be 1.04, 1.33, and 1.61 yuan, respectively. With the recovery of consumer demand, catering can gradually recover; the food business has great potential with the release of production capacity and the establishment of channels, and maintains the "overweight" rating.

3.15. Jiabiyou: Rapid recovery of revenue growth and improved real profitability

2020Q2 revenue resumed rapid growth. 2020Q1 Affected by the epidemic, the company has been suspended for more than a month, and the 2020Q1 revenue growth rate has been greatly affected. With the effective control of the epidemic in Wuhan in the second quarter, the revenue growth rate recovered rapidly. Among them, ARA is expected to increase by about 20% in a single quarter of 2020Q2, DHA is basically flat, and SA has more than doubled growth. The future development prospects are promising. In the first half of the year, foreign revenue accounted for 34%, and the expansion of the international market was less affected by the epidemic and continued to maintain a good momentum.

Profitability continued to improve and expense ratio levels continued to decline. 2020Q2 gross profit margin continued to improve, increasing by 1.94pct to 56.9%, which should be due to the rapid growth of SA with higher gross profit margin and the greater contribution to the increase in revenue share. Expenses showed a scale effect, and the expense ratio level continued to decline. It was observed that the sales, management, and R&D expense ratios decreased by 0.14pct, 0.03pct, and 0.48pct year-on-year. 2020Q2 net profit margin was 48.1%, a year-on-year decrease of 2.51pct, mainly due to the recovery of about 6.2 million bad debts of accounts receivable accrued in the second quarter of 2019, which resulted in a large base in 2019Q2, and continued to accrue about 1.66 million credit impairment losses in 2020Q2, with an increase and a decrease affecting profits of about 7.86 million yuan. If the influence of this factor is excluded, the estimated profit growth rate should exceed 20%.

The prospect of the implementation of the new national standard for milk powder and the expansion of the global market is still promising. As the largest leader of ARA in China, the company has high industry barriers and outstanding competitive advantages. We continue to focus on the explosion of the company's ARA and DHA businesses brought about by the implementation of the new national standard around 2021. At the same time, as the patents of global market rival DSM expire in 2023, the company is expected to enter the international market with its superior technical service capabilities and high-quality products. In the medium and long term, the company's performance growth and certainty are high.

Investment advice: Maintain the forecast of the company's net profit attributable to the parent of 155 million, 189 million and 232 million in 2020-2022, and EPS of 1.29, 1.57 and 1.93 yuan respectively. The company is the largest leader in the domestic ARA industry and the second largest in the world. The industry barriers are high and the pattern continues to improve. The downstream high-end milk powder demand continues to improve, the implementation of the new national standard, and global development will accelerate the company's development and maintain "buy". investment rating.

3.16. Huangshanghuang: The growth rate of business performance has fallen, and the expansion of stores is progressing smoothly

The company's 2020Q3 performance is slightly lower than expected, and the growth rate is relatively slow slow. In the first three quarters of 2020, the company achieved revenue of 1.934 billion yuan, a year-on-year increase of 15.31%; net profit attributable to the parent was 233 million yuan, a year-on-year increase of 10.26%. In 2020Q3, the single-quarter revenue was 570 million yuan, a year-on-year increase of 11.97%, and the net profit attributable to the parent was 76 million yuan, a year-on-year increase of 6.34%. In the first three quarters of 2020, the company's Huangshanghuang meat product business increased by 13.53% year-on-year, and the real old rice product business increased by 22.79% year-on-year. In the single quarter of 2020Q3, the meat product business increased by 12.20% year-on-year, and the rice product business increased by 8.54% year-on-year. The main reason is that the summer rainstorm and flood affected the company's store opening rhythm. In the first quarter, the epidemic caused consumers to make compensatory consumption in the second quarter, and returned to normal in the third quarter. In addition, the real old rice products business has a strong seasonality, the growth rate of the Dragon Boat Festival accelerated, and the growth rate naturally fell after the Dragon Boat Festival. The company's gross profit margin in 2020Q3 was 36.8%, a year-on-year decrease of 1.1pct. The price of raw materials for rice products rose due to the impact of the epidemic in the third quarter. The sales expense ratio was 15.4%, a year-on-year increase of 1.4pct. Due to the company's participation in live broadcasts, takeaways and other online sales, Channel expenses have increased, so single-quarter profit growth has slowed.

The store opening plan is expected to be successfully completed, and the future prospects are promising. The company's plan to open 1,200 stores in 2020 is likely to be successfully completed. The survival rate of newly opened stores is high. The franchise model facilitates rapid offline deployment. The plan for thousands of stores in thousands of cities will be promoted in an orderly manner in the next three years. It is expected to increase the single-store revenue. The company announced that it will build a new 10,000-ton sauce-braised food processing project in Rongchang, Chongqing, with a total investment of 80 million yuan. It is expected to be completed in June 2022. The advancement of this project will further increase the company's production capacity and provide effective protection for the company's store expansion in southwest China. The company's rice products business has benefited from channel sorting and will return to growth in 2020. It is expected that the company will return to the fast growth lane in the fourth quarter, and the rapid expansion of stores will bring rapid performance growth to the company.

Investment suggestion: It is estimated that the company's net profit attributable to the parent in 2020-2022 will be 2.7, 3.3, and 400 million yuan, an increase of 23.3%, 21.7%, and 21.2%, corresponding to EPS They are 0.53, 0.64 and 0.78 yuan respectively. As an old-fashioned braised product company, the company has returned to the high-speed growth channel since the management change in 2017, opened stores rapidly, and the factory construction is progressing steadily. It is optimistic about the company's future growth and maintains the "overweight" rating.

3.17. Juewei Food: The growth rate of performance has recovered and the growth certainty is strong

The company's 2020Q3 performance has gradually recovered and returned to the growth track. The company's 2020Q1-Q3 revenue was 3.89 billion yuan, a year-on-year decrease of 0.01%; the net profit attributable to the parent was 520 million yuan, a year-on-year decrease of 15.30%; the 2020Q3 revenue was 1.472 billion yuan, a year-on-year increase of 5.46%, and the net profit attributable to the parent was 246 million yuan , an increase of 6.34% year-on-year. In terms of business, in 2020Q3, the revenue of halogen products, franchisee management, and other businesses was 1.355 billion, 2.2, and 60 million yuan, up 2.1%, 59.1%, and 135.8% year-on-year.%, store expansion increases franchisee management income, and cold chain business growth drives other business income. In terms of sub-regions, the growth rate of various regions in 2020Q3 has picked up, and South China and East China are still slightly down. The decline in the same store in 2020Q3 is expected to narrow, and the stores will continue to expand. It is expected that the net increase of stores will be about 300-400. In the long run, it will boost performance after the epidemic. The decline in revenue in the third quarter will narrow, and the annual revenue is expected to turn positive.

Gross and net profit margins rebounded, and the results of cost reduction and efficiency enhancement appeared. The company's gross profit margin in 2020Q3 was 37.6%, a year-on-year increase of 2.1pct, which was due to the decline in raw material prices; the company's 2020Q3 sales/administrative expense ratios were 8.2/6.4%, a year-on-year change of -1.5pct/1.3pct; sales expenses decreased Due to the decrease in the company's publicity expenses in the third quarter, the increase in management expenses was caused by the company's efforts in store operations and increased store inspections. The company achieved a net profit margin of 16.6% in 2020Q3, a year-on-year increase of 1.2pct. Due to the recovery of gross profit margin and the achievement of cost reduction and efficiency enhancement, the company's net profit margin rebounded in the third quarter, and it is expected that the performance in the fourth quarter will continue to recover.

The industry leader, with obvious advantages and strong performance growth certainty. The leisure braised product industry has a broad space, and the company's stores still have room to double. The company is the industry leader with obvious brand advantages. The channel strategy has been upgraded to "in-depth coverage and intensive channel cultivation". During the epidemic, the company has bucked the trend and opened more stores than expected. The company embraces new media and new channels to increase single-store revenue, with obvious scale advantages, strong upstream bargaining power, and good cost control capabilities. The company's three-fee ratio is lower than that of its peers, with high operating efficiency and strong growth certainty.

Investment advice: It is estimated that the company's net profit attributable to the parent in 2020-2022 will be 8.0, 1.04 and 1.20 billion yuan, respectively, flat, up 29.9% and 15.5%, corresponding to EPS respectively At 1.32, 1.71, and 1.98 yuan, the company's leading position in the industry is stable, and its performance has gradually recovered, maintaining the "overweight" rating.

4. Risk Warning

The risk of macroeconomic fluctuations, the risk that the progress of consumption recovery is lower than expected, the risk of raw material price fluctuations, etc.


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Label group:[food and drink] [continuous improvement] [Net interest rate] [sales expense] [gross profit margin] [Price elasticity] [elasticity of demand

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