Xinbao shares (002705) 2019 third quarterly report review: domestic brand business explosiveness surpasses expectations
Event: Xinbao issued the third quarter report of 2019, and achieved total operating income of 68 in the first three quarters of 2019.
3 ‰, one year +9.
2%, net profit attributable to mother 5.
2 ‰, +44 per year.
Among them, the total operating income for a single quarter in 19Q3 was 27.
800 million, ten years +11.
8%, net profit attributable to mother 2.
780,000 yuan, +26 a year.
The company’s revenue growth rate in 19Q3 increased slightly from the previous quarter. The profit growth rate in the single quarter of 19Q3 was much higher than revenue, and the profit elasticity was better than market expectations.
Opinion: Revenue analysis: Benefits of replenishment for export sales continue to increase, and accelerated growth of domestic sales is greater than expected. Benefits of replenishment for export sales continue to grow.
Since 2017H2, fluctuations in exchange rates have increased, uncertain factors such as trade tariffs have increased, orders from overseas customers have decreased, and company orders have also been compromised, resulting in low fluctuations in export revenue growth.
Due to the next severe shortage in the previous period, overseas customers’ inventory replenishment, and replenishment demand during peak seasons were clear. Therefore, the company’s export order interval growth rate resumed to about 10% from 19Q2, and continued to maintain in 19Q3, and the company’s revenue growth rate rebounded.
Mofei Dongling Super expects a high increase, and the domestic brand’s explosiveness surpasses expectations.
The domestic sales revenue of the company in H1 2019 will increase by 29% annually, and the growth rate of domestic sales revenue in the first three quarters of 2019 will increase to 40%.
In 19Q3, the growth of Mofei further accelerated, and its single-quarter revenue is expected to exceed 200 million. The cumulative revenue in the first three quarters has exceeded 400 million (18 years).
In addition, after the brand and product upgrade based on the external environment, Dongling achieved immediate results, and the single-quarter revenue resumed growth.
Revenue prospects: Under the tide of social e-commerce, the domestic brand business expectation continues to exceed expectations. The company ‘s biggest quarterly report in the third quarter is the rapid growth of domestic brands. The core reasons are: 1) Social e-commerce dividends are much higher than expected, and the impact of social e-commerce is small.The consumption mode of home appliances is rapidly changing; 2) The Mofei team has formed a set of explosive products adapted to social e-commerce, using innovative products + content to explode, quickly running under the tuyere, and driving the transformation of Dongling and other Xinbao subsidiary brandsUpgrade, the effect is immediate.
The above two trends will continue in the foreseeable future, and the company’s domestic brand business is expected to continue to exceed market expectations.
Profit analysis: exchange rate contribution variables, domestic brand profit contribution flexibility is large, costs are still contributing positively, and exchange rate contributions overlap.
19Q3 single quarter gross margin and financial expense ratio increased by +4.
1pct. Due to the high base of exchange rate-related financial contributions, from the perspective of hedging-related investment income and fair value changes, the 19Q3 decreased by 54.73 million (18Q3 total profit of 31.55 million). In summary, the depreciation of the value of the RMB against the US dollarProfit contribution is changing, and cost factors are still contributing positively.
The profit contribution of domestic brands has great flexibility.
Although the profit contribution from the depreciation of the 19Q3 exchange rate has declined, the company’s profit growth rate is still significantly faster than the revenue growth rate. We believe that the profit elasticity brought by the high growth of domestic brand business, that is, the profit margin is significantly higher.The proportion of domestic brand revenue is rising rapidly, driving the overall profit margin to increase.
Profit outlook: The future profit elasticity comes from domestic brands. We estimate that the actual net profit margin of Mofei is more than 15%, and the actual net profit margin of Dongling is close to 10%. The profitability of domestic brands is much higher than the foundry business (5?
6%), through the rapid growth of domestic brand business, its marginal contribution to high profitability will become more apparent, about 19Q3 domestic brand’s profit contribution has exceeded 15%.
It is expected that the maximum amount of the incentive fund will be withdrawn and the management expenses will be increased by about 4,000 million.
According to the company’s previous announcement of “Administrative Measures for the Annual Performance Incentive Fund Plan”, it is estimated that the maximum amount for 2019 will be 40 million yuan, which will increase management costs by about 40 million yuan.
It is expected that the increase in profitability in the fourth quarter of 19 will be lower than the previous month due to customers’ price adjustment requirements, but the domestic brand business has a large profit elasticity. After considering the cost of the incentive fund, we expect the company’s net profit attributable to mothers to achieve more than 25% growth in 2019.
The domestic brand business has a better business model and improved operating quality. Compared to the foundry business, the domestic brand business has stronger industrial chain pricing power and a better business model. From the financial statements, the company ‘s net cash flow from operating activities in the single quarter of 19Q3 reached 5.
89 ppm, previously + 147%, advance receipts at the end of the period rose to 1.
72 ppm, previous + 51%, accounts receivable + notes totaled 12.
600 million, down 8% a year.
New potential for small household appliances consumption, how Xinbao’s domestic sales business can take advantage of the wind and the new environment for small household appliances consumption has given new brands a chance to break through.
With the rise of new consumer groups, new channels and new marketing methods, consumer demand for small appliances and matching business strategies are undergoing huge changes, which 深圳桑拿网 has given the opportunity for new brands to break through. We have already seen Xiaomi, Xiaoxiong, and MofeiAnd many other cases.
In this context, Xinbao’s domestic sales business has two great development potentials: 1) Domestic brand business.
The Mofei team has worked out a set of “explosive methodologies” to adapt to the new environment. In the context of social e-commerce, revenue is committed to maintaining rapid growth. As a result, Xinbao has established 6 domestic brands covering different categories.Matrix, if Xinbao’s supply chain capabilities and Mofei’s business ideas can gradually incubate more Internet celebrity brands similar to Mofei, Xinbao’s domestic brand business scale is expected to break through quickly.
2) Serving Little B’s supply platform.
Due to low-volume, non-standardized products, small B (net red, KOL) was unable to obtain top-level supply chain support in the small home appliance category in the past. As a supply platform, Xinbao has strong flexible supply chain capabilities and service experience.The dimension of the chain empowers small B. In the domestic market, there will be two types of ODM customers: retailer private brands and online celebrity brands.
Profit forecast, forecast and rating company maintains rapid growth in export sales in 19Q3, domestic brand business accelerates, and overall revenue growth is slightly higher than the previous quarter. Benefiting from the domestic brand profit contribution, the profit growth rate in the single quarter of 19Q3 is much higher than revenue and profitElasticity is better than market expectations.
Maintain 2019-2021 EPS forecast to 0.
09 yuan, corresponding to PE is 20/17/15 times. Under the brand of social e-commerce, the company’s domestic brand business is expected to continue to exceed expectations, and the new environment for the consumption of small appliances gives Xinbao two major development potentials, and the domestic sales business has ample space.
Maintain “Buy” rating.
Risk warning: The sharp appreciation of the RMB exchange rate affects profitability, and domestic brand business innovation is weak.