Juewei Food (603517): Store expansion steadily brings high profit elasticity

Juewei Food (603517): Store expansion steadily brings high profit elasticity
This report reads: The company ‘s Q2 earnings elasticity is better than expected, raw material price fluctuations have limited impact on gross profit margins, and revenues in eastern and southern China have maintained a rapid growth trend. It is expected that store expansion and 北京夜网 increased single store revenue will drive long-term steady growth and growth.  Investment points: Investment advice: Economies of scale bring stronger upstream bargaining power and higher supply chain efficiency. There is no need to cancel the upper limit of the number of border stores under strong channel management capabilities.Maintain 2019-21EPS 1.35, 1.58,1.82 yuan (1 before ex-rights.89, 2.21, 2.54 yuan), considering the overall upward adjustment of the sector, raise the target price to 51 yuan, corresponding to 32X PE in 2020, increase rating.  Raw material price fluctuations have limited impact on gross profit margins, and earnings elasticity has exceeded expectations.H1 income is 24.900 million, net profit attributable to mother 3.9.6 billion, an increase of 19 years.4% and 25.8%.Among them, single Q2 income of 13.36 billion, net 都市夜网 profit attributable to mother 2.1.5 billion, an increase of 19 in ten years.24% and 30.77%.The company’s gross profit margin was downgraded by an average of 1.4 points to 35.03%, which is expected to be related to fluctuations in the prices of upstream raw materials.2pct to 9%, which is expected to be related to the full reduction policy, and the management expense rate will be reduced and downgraded.8 points to 4.73%, scale effect manifested, net profit margin extended by 1.4pct to 16%.Q2 sales receipts matched revenues, and net operating cash flow increased significantly to 5 billion.  The income of East China has tended to catch up with that of Central China, and South China has also maintained rapid growth.In terms of different products, H1 halogen products have an income of 23.800 million, accounting for 97.5%, including fresh goods income 23.7.4 billion, poultry and vegetables revenues were 1.9 billion, 2 respectively.500 million, accounting for 78.4%, 10.4%.In terms of different regions, East China maintained rapid growth, and its revenue share rose by 13 pct to 25 compared with 2018.4%, almost equal to the first market in Central China.There is also an accelerated growth trend in South China.  Expansion of stores and increase in single store revenues are expected to drive long-term steady growth.In 2019H1, there was a net increase of 683 stores to 10,598, and a steady increase in the annual net increase of about 1,000 stores. The expansion of take-out to lower-tier cities helped; the single-store revenue increased steadily, and Q2 increased by 6.4% to 12.60000.Economies of scale bring stronger upstream bargaining power and higher supply chain efficiency.In addition, “Pepper Flavor” is expected to become a new growth point of performance based on the advantages of the industrial chain.  Risk warning: major mistakes in business strategy; risk of food safety issues