Huiji Mountain (601579): Expected revenue reorganization

Huiji Mountain (601579): Expected revenue reorganization

1H19 revenue was slightly better than expected Hueijishan announced 1H19 results, revenue 5.
.

5.4 billion, with a decrease of 5.

18%, net profit attributable to mother 0.

67 trillion, the same minus 20.

06%.

The revenue in the first half of the year was slightly better than expected, mainly because the expected range of middle and high-end wine products in the second quarter was smaller than expected.

We expect the initial company revenue to decrease by -6.

6%.

Development trend The overall demand for rice wine is severely weak, and the performance of ordinary wine and rice wine sales regions is obvious.

In the first half of the year, the company’s ordinary rice wine revenue decreased by 12%, and in the first half of the year, the company only achieved a positive increase in revenue of 42% in Shanghai. The remaining sales regions replaced each other to varying degrees, and the base camp Zhejiang revenue decreased by 12%.

Industry leader Gu Yue Longshan also showed a similar income development trend, reflecting the aging population structure, the impact of macroeconomic growth trends on consumption, and the overall demand for rice wine was severely weak.

The product structure continues to be actively upgraded.

The company continued to focus on core single products and eliminated low-end products, including the launch of a master Lanting with a price of 1,000 yuan, with a view to further enhancing the brand value and revenue structure.

The company’s overall development strategy is still highly conservative, and its revenue scale urgently needs new growth areas, otherwise it will be difficult to achieve long-term growth based on a single product structure upgrade.

Compared with the industry leader Guyue Longshan, the company’s efforts to release marketing expenses and its expansion outside the province are significantly inferior.

The company and the industry are currently expanding at a slow pace, and they face continuous pressure to reduce revenue in mature markets. It is difficult to sustain growth only by relying on the structural upgrade of existing markets.

How to promote regional expansion through the differentiated advantages of rice wine category and marketing model innovation is a problem that the company and the industry need to solve urgently.

Earnings forecasts and estimates Adjusted EPS –西安耍耍网1 for 2019/20 due to higher income forecasts for premium wines.

7% / 12.

2% to 0.

283/0.

297 yuan, raise the target price of 8.

1% to 8.

02 yuan, corresponding to 28 in 2019/20.

4x / 27.

0x P / E, the current price corresponds to 2019/20 29.

6x / 27.

9x P / E with a target price of 3.

4% downside, maintain neutral rating.

Risks If the company’s marketing continues to be conservative, it will be difficult for revenue to grow steadily