Shuijingfang (600779): There is great potential to build a national sub-high-end leading brand

Shuijingfang (600779): There is great potential to build a national sub-high-end leading brand

The 3Q19 results exceeded our expectations for the company’s third quarter results: 3Q19 revenue.

610,000 yuan, an increase of 19 in ten years.

7%; net profit attributable to mother is 30,000 yuan, corresponding profit is 0.

613 yuan, an increase of 53 previously.

4%, a record high for the quarter.

The company’s revenue was basically in line with our expectations, but the profit exceeded our 南京桑拿网 expectations, mainly due to the compression of expense ratios and a small increase in gross profit margin.

  Development Trends The company’s strategy focuses on the brand building of Shuijingfang. We are optimistic about its strategic decision-making and the potential of the Chinese market.

The 厦门夜网 company is vigorously spending on brand communications and product innovation, and we expect a sales expense ratio of 29 in 2019.

6%, the brand promotion cost alone reaches 8.

200 million US dollars, the absolute amount continues to increase, we think these join the Shui Jingfang brand at 300?
The 500 yuan sub-high-end price continues to accumulate advantages, helping it build a national sub-high-end strong brand.

We measure this market space 8?
After 10 years, it can reach a scale of nearly 2,000 trillion. Shuijingfang’s potential needs strong brands to be able to tap deep.

  National growth showed a good trend, and steady growth was sustainable.

The company has reduced weak areas in northern and southern provinces, but we estimate that 3Q19 revenue growth in these areas will reach 25?
28%, showing a growth rate; the eastern and western regions of mature regions are still growing at 17?
18%, we believe that this shows the company’s sustainable regional expansion logic, and it also proves that Shuijingfang’s national capacity and momentum have been confirmed.

  We believe that the competitiveness of Shuijingfang’s products continues to improve, and the company’s production capacity and process construction will truly bring quality improvement to the company. Based on the company’s excellent brand and product design, we believe that the company’s products can achieve first-class competitiveness andValue for money.

  Earnings Forecasts and Estimates As we lowered the company’s sales expense ratio, we raised our net profit for 2019/20204.

4% / 9.

1% to 7.


8.9 billion.

Currently corresponds to 28/2019/2020.

5 times / 20.

6 times price-earnings ratio.

We maintain our Outperform rating, but we raise our target price by 10 as earnings are raised and estimates are switched to 2020 ahead of schedule.

0% to 66.

00 yuan corresponds to 41.

0 times 2019 P / E ratio and 29.

6 times 2020 price-earnings ratio, compared with 43 previously included.

7% upside.

  Risks If a company forces a price increase, its channel competitiveness will be compromised.