China Pets (002891): Performance in line with expectations of high domestic business growth
2019H1, net profit starts from zero38.
91%, in line with our expectations of the company’s 2019 Interim Report, which reports two companies, the company achieved revenue7.
8.7 billion (among which pet snacks6.
460,000 yuan, +20 compared with the same period last year.
97%; canned pets1.
10,000 yuan, +18.
30%; pet staple food 0.
270,000 yuan, a year-on-year increase of +36.
30%), a year-on-year increase of +21.
58%, net profit attributable to shareholders of listed companies was 1610.
690,000 yuan, yoy-38.
91%, the company’s performance is in line with our expectations.
In a single quarter, 2019Q2, the company’s operating income4.
0.7 million yuan, +9 compared with the same period last year.
71%, net profit attributable to shareholders of listed companies was 926.
270,000 yuan, yoy-32.
We expect the company’s EPS to be zero in 2019-21.
52 yuan, 0.
75 yuan, 1.
12 yuan to maintain the “overweight” level.
The domestic market investment has dragged down the performance, and the business has been stable and progressed. In the first half of 2019, the company’s operating income has steadily increased, and the net profit attributable to mothers has expanded and decreased, which is mainly affected by factors such as the expansion of the domestic market and the increase in raw material costs. 1) 2019H1In order to develop the domestic market business, the company’s selling expenses are zero.
770,000 yuan, an increase of 59 in ten years.
05%, R & D investment is 0.
11 million yuan, an increase of 38 in ten years.
17%; 2) The price of chicken meat has risen rapidly, the cost of chicken breasts as the company’s main raw material has risen, and the overall gross profit rate has been lowered; 3), the increase in the company’s financial expenses is also one of the factors that reduce the performance.Is 0.
110,000 yuan, an annual increase of 910.
The development of domestic and foreign markets continues to advance, and the growth drives the company’s growth. The company actively promotes strategic layout, acquires overseas, establishes subsidiaries, promotes product sales and market expansion, and comprehensively improves channel layout and construction of new retail models in the domestic market.
In the domestic market, the company has reached strategic cooperation intentions with Tmall, Suning, and JD.com, and established e-commerce teams such as Nanjing Cloud Cat, Zhongsong Songzhi, and Weihai Haotong to focus on the development of online channels; offline, the company and petsStore cooperation, while entering Ruipeng medical 深圳桑拿网 system, opening up pet medical channels.
In the short term, the development of the domestic market requires a lot of expenses, which puts pressure on profitability.
In essence, the domestic market has room to resist development, and the domestic revenue of H1 companies in 20191.
5.2 billion, a previous increase of 37.
35%, the company’s domestic revenue expansion in 2019 is expected to further increase.
Carry out capital operation, strategic layout to seize the advantage of reorganizing the capital market of leading companies, actively carry out capital operation, and strengthen the construction of emerging markets.
Reporting basis, 1) Invested in Amoy Pets (Cambodia) Company, and agreed to change its business scope to pet meat products, research and development, production, sales and import and export of edible chewing 杭州桑拿 gum, further improve the overseas production capacity layout, and increase resistance to trade friction 2) Signed the “Industrial Fund Cooperation Framework Agreement” with Beijing Fangyuan Jinding, which provides a platform for China Pet’s industrial investment, mergers and acquisitions, and promotes the company’s industrial chain layout.
Long-term strategic layout + strong market-side sales, maintain “overweight” rating, we estimate that the company’s net profit will be zero in 2019-21.
880,000 yuan, 1.270,000 yuan and 1.
8.9 billion yuan, corresponding to EPS (after diluted share capital) are 0.
52 yuan, 0.
75 yuan, 1.
With reference to 30 times the PE level of comparable companies in 2019, considering the growth space of domestic pet industry breakthroughs and the breakthroughs achieved by the company’s internal sales, we give the company 40 in 2019?
43 times PE, corresponding to a target price of 20 in 2019.
36 yuan, maintaining the “overweight” level.
Risk warning: intensified competition in overseas markets, fluctuations in raw material prices and exchange rate fluctuations.