Xiangpiaopiao (603711): The pioneer of the category from zero to one is optimistic about Xiangpiaopiao taking off for the second time

Xiangpiaopiao (603711): The pioneer of the category from zero to one is optimistic about Xiangpiaopiao taking off for the second time
Short-term perspective: 1) Frozen display is expected to be further strengthened: As this is the first full year of juice tea launch, the company has little experience with terminal freeze display cabinets in the peak season, so we expect the company’s juice tea this yearIt can achieve about 1 billion revenues, far exceeding the company’s initial goal of 500 million to 600 million, with outstanding results.Looking forward to next year, the company expects to release 1-2 million customized freezers to the terminal. We are optimistic about the performance of the juice tea season next year.2) Renewable packaging for new brewing + activation of new spokesperson + additional double spelling series: renewed packaging for 2019 brewing series to help increase product vitality, coupled with the activation of new spokespersons to capture new customers for the company; lower, the company in 2019H2 launched the Shuangpin series to target the high-end market for brewing.The new series began shipping in November and is expected to continue to contribute additional growth next year.3) Cost-side improvement: We expect that through the improvement of scale effect on the production side and the increase of capacity utilization of the new production line, the gross profit margin of juice tea is expected to increase to around 40% within two years, and the improvement of profitability can be expected. Long-term 南宁桑拿 logic: 1) Channel sinking space: The company’s income distribution is still uneven across the country, and mature markets in East China contribute nearly half of the source of revenue. Intensive cultivation and sinking of channels in other regions can maximize the expansion space.Specifically, cities in the third and fourth tiers and below contribute nearly 70% of the revenue of the brewing category, and the market capacity is huge.At present, there are nearly 3,000 counties and cities, and the county population accounts for more than 60%. The company’s current coverage rate is nearly 2/3. The company implements the “three links policy” (that is, county links, town links, and village links).Pioneering and intensive cultivation can provide a driving force for the company’s steady growth of the brewing sector in the next 3-5 years.2) Juice tea outbreak potential: The market space and consumption scenarios of ready-to-drink products are much larger than brewing products. Juice tea has both channel thrust and brand pull. We believe that in the long run, the revenue of juice tea may exceed the brewing sector.3) Equity incentives demonstrate the company ‘s development confidence: The corresponding unlocking conditions for this equity incentive are relatively strict, corresponding to the company ‘s compound growth of 21% in 2017-2021. The company sets long-term target values for the revenue and profit end, which demonstrates the company ‘s development confidence. Earnings forecast: EPS is expected to be 0 in 2019-2021.87, 1.12.1.43 yuan, corresponding to PE is 29 times, 22 times, 18 times, maintaining the “buy” level. Risk warning: The volume of juice tea or the channel sinks less than expected, intensified competition in the industry, and food safety issues.