Chengde Lulu (000848): Cost pressure is under control during off-season

Chengde Lulu (000848): Cost pressure is under control during off-season

1H19 results are better than expected The company announced 1H19 results: revenue 12.

600 million, an increase of 6.

6%, net profit attributable to mother 2.

600 million, an increase of 3.

7%; corresponding to 2Q19 single quarter revenue increased by 14.

8%, net profit attributable to mother increased by 16.


The performance was better than market expectations.

Trend 2Q19 The off-season income accelerated in the second quarter, but its contribution to the long-term was limited.

2Q is the traditional off-season of the company’s sales. The proportion of revenue in the area is relatively small, and revenue in 19Q2 increased by 14 as well.

8%, the growth rate increased by 10 from 1Q19.

9ppt, which exceeded market expectations, but contributed significantly to the first half and even earlier.

We believe that the company has established brand strength in the field of almond dew. At present, the strategic benefits of large brands have begun to appear. Both classic and new 深圳桑拿网 products have taken a two-pronged approach. Based on the four basic items of classic, hot drink, sugar-free and small dew,The catering channel has added 1 liter of items to form full coverage of specifications and price bands. We expect the company to have a stable market performance in the weak protein beverage industry in the second half of the year.

Gross profit margin remained at a high level, benefiting from product structure upgrades, price increases and cost control.

Gross profit margin for the second quarter of 19 was 51.

4%, ten years +0.

8ppt, -2ppt month-on-month. Despite the pressure from almond raw material prices, the gross profit margin level remains high.

We believe that the gradual increase in gross profit margin benefits from: 1) high-margin new products have formed a certain increase in revenue after 佛山桑拿网 about 1 year of market promotion, so they have contributed to the upgrade of product structure 2) grassroots findings show that the company through the almond raw material reserve andProduct price increases to cope with the pressure of rising costs. In summary, we judge that the upward pressure on the company’s raw material costs is controllable. We expect that gradually the gross profit margin will remain relatively stable.

In 1H19, the sales expense ratio increased slightly, and in the long run, the increase in marketing expenditure is still the trend.

Company 1H19 selling expenses expense 21.

1%, ten years +0.

4ppt, still at a high level, mainly due to increased advertising efforts.

We believe that the company’s sales expense ratio stays above 20% is a reasonable level. At present, the company is actively exploring new advertising models, adjusting the advertising mode, and working hard to improve the effectiveness of advertising. We believe that the company’s increased investment in branding willLong-term income growth has played a positive role.

Earnings Forecasts and Estimates Due to the limited contribution to expected results in the second and third quarters, we maintain our 2019 and 2020 earnings forecasts and maintain our neutral rating and target price.

7 yuan, the target price corresponds to 20/19 times P / E in 2019/2020, the current price corresponds to 18/17 times P / E in 2019/2020, and the current price has 12% upside.

Increased competition in risk industries, cost fluctuations, and food safety risks.