Baby-friendly Room (603214): The gross profit margin of mother-infant chain leader steadily increased, and the expected revenue growth will accelerate quarterly

Key points of investment: The net profit attributable to the mother is 17.76 million yuan in 2019Q1, an increase of 46 year-on-year.

4%, faster growth than expected.

1) 19Q1 achieved income 5.

5 ppm, an increase of 13 in ten years.

21%, net profit attributable to mothers was 17.76 million yuan, an increase of 46 year-on-year.

4%, mainly due to higher financial management income and government subsidies, deducting 14.48 million yuan in non-net profit, an annual increase of 24.

9%.

The business expanded steadily, profitability increased steadily, tax reform impacted the increase in stocking and dragged single-quarter cash flow, and overall asset quality was relatively stable.

1) The company’s profitability is improving and its gross profit margin has steadily increased.

In 1Q1, the company’s gross profit margin rose by 1 in the short term.

3pct to 26.

5%, leading to a net distance increase of 0.

7 points to 3.

6%, the company’s profitability has steadily improved.

2) The expansion of stores accelerated the current sales expense ratio, and the benefit scale effect of management expenses slightly decreased.

1Q1 sales expense ratio increased by half a year3.

2pct to 19.

9%, mainly due to the acceleration of store openings, and new stores are mainly large shopping malls, and the management expense ratio (including research and development expenses) decreased by 1.

3 points to 2.

3%, the cost is generally stable.

3) Receivables accelerate the 南京桑拿网 reduction of accounts receivable, increase the rapid expansion of stock preparation, and drag down cash flow in a single quarter.

As of 19Q1, the accounts receivable of 13.56 million yuan was 8.61 million yuan lower than the same period of the previous year, and the inventory was 5.

20,000 yuan, an increase of 31 in ten years.

8%, mainly due to the advancement of stock changes affected by the reform, dragged down net operating cash by 31.3 million yuan.

In 19Q1, it opened 1 to 224 directly-operated stores. The opening of stores in the second half of the year will accelerate, and it is optimistic that the company’s growth will accelerate quarter by quarter.

19Q1 opened 6 stores for a total of 3937 square meters, 5 closed stores for a total of 2211 square meters, mainly due to the adjustment of the channel structure. The newly opened area is significantly larger than the closed area.Prior to opening a store, it is estimated that Q1 same-store growth will be about a single digit, maintaining a better level.

Accelerated merger and opening of stores will accelerate the growth in the future.

Store sales accounted for over 90% of the revenue, and the gross profit margin of milk powder increased significantly, and the gross profit margin of various regions was stable and better.

1) In terms of business types: the gross profit margin of all items has been increased equally, and the sales revenue of stores that account for over 90% has increased significantly every year.

5% to 4.

9.8 billion, gross margin increased by 1.

41pct, e-commerce revenue was 13.46 million yuan, an increase of 84% in one year, and wholesale revenue decreased by 769 million, dragging down overall revenue growth.

2) In terms of products, the proportion of high-end products benefiting from higher gross profit margins increased, and the gross profit margin of milk powder, which accounted for nearly half of the revenue, increased significantly4.

89pct directly drives the company’s profitability.

Milk powder revenue is increasing by 18 per year.

7% up to 2.

600 million, gross margin increased by 4.

89pct to 20.5%.

Cotton textiles were affected by the adjustment of product structure, and the gross profit margin decreased for the current period3.

19pct to 39%, it is expected that the proportion of independent products will increase in the future.

3) By region: Shanghai ‘s revenue accounted for nearly half of the gross margin increase, and Zhejiang ‘s growth rate.

Shanghai’s income grows by 3 per year.

78% reached 2.

6.7 billion, from 1 to 83 net closing shops.

Zhejiang has a relatively high growth rate, with one net closing shop reaching 45 and an increase in revenue of 41.

2% amounted to 92.84 million yuan, gross margin increased by 1.

65pct to 23.

9% higher than other regions.

Jiangsu has three net stores, with an annual revenue increase of 18.

5%, Fujian stores did not adjust revenue by 20%.

The company is the only high-quality mother-infant chain target, endogenous + extension promotes accelerated exhibition, and the increase in the proportion of private brands promotes gross profit margin and maintains the level of overweight.

Starting from 19 years, the mid- to high-level equity incentives are based on 18 years, and the three-year performance target CAGR is 20%, showing development confidence.

We maintain our original profit forecast and expect net profit attributable to mothers in 2019-2021.

46/1.

81/2.

12 ‰, corresponding to PE of 29/24/20 times, maintaining an overweight rating.