Tsingtao Brewery (600600) Company Research: Product Structure Continues to Improve, Tax Cuts, Losses Turnaround, Contributions to Growth

Tsingtao Brewery (600600) Company Research: Product Structure Continues to Improve, Tax Cuts, Losses Turnaround, Contributions to Growth
The company released the 2019 third quarter report.The company achieved operating income of 248 in the first three quarters of 2019.97 ppm, +5 for ten years.31%; net profit attributable to mother is 25.86 million yuan, +23 a year.15%; of which 83 in the third quarter.460,000 yuan, at least -1.66%; net profit attributable to mother to Q3 is 9.55 ppm, +19 for ten years.77%, performance in line with market expectations.  There is no need to over-allocate the increase in sales in Q3, and due attention should be paid to the increase in ton prices.In the first three quarters of 2019, the company’s beer sales were 719.5 Initially, flat for one year; single Q3 sales were 246.5 initially, at least -5.9% is basically: 1) Excessive rain this year, affected by the weather, the overall industry sales increased in July-August; 2) The sales volume increased by 16 indicators in the first half of the year, and some regional channel inventory increased;Upgrade, some low-南京夜网end sales were involved in obtaining.Single Q3 company Qingdao main brand sales fell 2.4%, lower than the increase in overall sales. The sales volume of Qingdao’s main brand increased by one level.7 pct to 47.5%.The company’s Q3 ton wine price was +4 in the past.3%, of which about 1 is expected.5-2 pct comes from the decrease in growth rate, and the other 2-3% comes from the improvement of the product structure. The company has been rapidly high-end since 2018. At present, high-end products in Shandong, Guangdong, Shanghai and other regions have performed well.  Q3 cost-side pressure still exists, the expense ratio slightly increased, and the decline in profitability contributed to the performance.The company’s Q3 ton wine cost half a year +2.3%, an earlier Q1 / Q2 growth rate of 3.5% / 4.6%, gross margin level is 40.3%, ten years +1.3 pct.Q3 selling expenses expense 16.1%, +0 compared to the same period last year.8 pct; Q3 management cost is reduced by 7 each time.7%, showing improvement in management efficiency.There was no asset impairment loss in the company in Q3 2019 (the asset impairment in Q1 2018 was 51.87 million yuan), and the company’s Q3 government subsidy1.31 trillion USD growth74.5%, if excluding asset impairment and government subsidy, Q3 adjusted EBIT +10 for ten years.7%.As some provinces and regions of the company turned losses into profits, the Q3 interest rate increased by 24.9%, a decrease of 4 over the same period last year.7 pct, also has controversial contributions to performance growth.  Prospects It is expected that the number of revenues will increase and the performance growth will remain around 20%.There is no need to worry about fluctuations in quarterly sales. It is estimated that the sales volume is expected to increase by about 1%, and the improvement in product structure + adjustments will contribute to a 4-6% increase in wine prices.The company accelerated its product structure upgrade in the base market this year, and some provinces and autonomous regions realized losses. However, although some low-end product sales have been lost, the gross profit margin has increased, operating efficiency has improved, and the additional rate of return has decreased. It is expected that performance will maintain a growth of about 20%.The estimated revenue for 2019/20/21 is 279.2/290.1/300.1 ppm, an increase of 5 in ten years.1% / 3.9% / 3.5%; net profit attributable to mothers is 17.0/20.7/24.90,000 yuan, an increase of 19 in ten years.6% / 21.6% / 20.6%; the current market value corresponds to PE of 38.1x / 31.3x / 26.0x.  Risk warning: Macroeconomic downturn, market competition intensifies, and raw material costs rise.