Xinbao shares (002705): Q2 performance exceeded expectations and steady domestic sales

Xinbao shares (002705): Q2 performance exceeded expectations and steady domestic sales

Incident August 27, 2019, Xinbao shares released the semi-annual report for 2019.

The company achieved total operating income of 40 in 2019H1.

43 trillion, ten years +7.

4%; net profit attributable to mother 2.

400,000 yuan, +73 for ten years.

9%; net profit deducted from non-attributed mothers2.

42 trillion, +48 a year.


In terms of quarters, the company’s single quarter revenue for Q1 / Q2 in 2019 was 18 respectively.

80, 21.

63 ppm, each year +3.

4%, +11.

2%, net profit attributable to mothers is 0.

89, 1.

52 trillion, a year of +106 changes.

5%, +59

2%; net profit after deduction is 0.

72, 1.

70 ppm, an increase of +100 each year.

9%, +34.


The growth rate of net profit exceeded the upper edge of the performance forecast, and the company’s performance exceeded market expectations.

Brief Comment 1. The export business is stable, and the domestic sales growth rate is dazzling. The company achieved a total operating income of 40 in 19H1.

4.3 billion, previously +7.

4%, of which Q2 realized operating income 21.

6.3 billion, ten years +11.


In terms of export, according to data from the General Administration of Customs, from January to June 2019, the export value of a small number of small household electrical appliances was US $ 15.6 billion, an increase of +7.


Among them, every 10% increase in electric heating furnaces such as induction cookers, food grinders and juicers +1 each time.

6%, electric coffee maker and ATP each +19.

6%, electric toaster +6 for ten years.


The company’s export revenue in 19H1 was 32.

800 million, previously +4.

9%, solid performance.

In terms of domestic sales, according to the total data pushed by Aowei Cloud Network, the retail sales of 19H1 small appliances (cooking, magnetic, pressing, beans, ingredients, pressing, water) were 288.

8 ppm, a ten-year increase2.
7%, the overall growth rate of the industry.
According to Tmall & Taobao data, the juicer sold 5.96 million units in Q2 2019, +62 per year.

1%, +141.

6%, so 7.

6.1 billion, previously +44.

7%, +126.


The company achieved domestic sales revenue in 19H1.

600 million, previously +37.


Mainly by the power of independent brands.

Among them, Mofei performed particularly well.

According to Tmall & Taobao data, Mofei Q2 sold 350,000 units with a market share of 5.

8%, sales of 77 million, market share of sales of 10 caliber.


2. At the same time, the gross profit margin of the domestic and export markets improved the company’s gross profit margin in 19H121.

4%, an increase of 2 per year.

83 points.

Q1 / Q2 gross profit margins are doubled +1.

79 points, +3.

69 points.

Among them, the gross profit margin of domestic sales was 32.

3%, ten years +2.

68 points, gross profit margin of export business 18.

8%, +2 per year.

66 points.

The reasons for the increase in gross profit margin are mainly 1) changes in income structure.

The proportion of high-margin domestic sales increased by 4.

10pct; 2) Favorable fluctuations in exchange rates.

The report states that the central parity of the USD against the RMB is 6.

78 + 6 per year.


3) Raw material prices have fallen.

The average value is reported, and the price of enamelled copper wire, the main raw material, is -8 in 2019H1.

54%, PP plastic for three years +1.

13%, the overall cost pressure on raw materials has been reduced.

3. Marketing expenses and R & D expenses increased by 19Q2. Sales expense ratio was 5.

21%, ten years +1.

42pct, mainly because the sales staff salary bonus and advertising expenses increased over the same period last year.

2Q19 management expense ratio 8.86%, ten years +0.

02pct, basically flat.

The number of reports, the company’s R & D expenses increased, and R & D expenses1.

500 million, previously +28.


19H1 financial expense ratio is 0.

23% a year -0.

3pct, where Q2 financial expense ratio is -0.

79%, ten years +1.

18 pcs.

According to the report average value, favorable exchange fluctuations of exchange rates decreased by 6.47 million compared with the same period of the previous year.

In addition, the company’s forward foreign exchange contracts (budget contracts) resulted in investment losses and losses from changes in fair value that were reduced by 29.11 million from the same period last year.

4. Inventory has increased, and cash flow has improved significantly. In 19H1, the book balance of inventory was 11.

9.6 billion, an increase of 13% over the same period of the previous year. The increase in the structure of commodity swaps issued by the structure was increased by 1.

9.7 billion to 3.

1.3 billion.

The inventory turnover days increased by 6 days to 67 days compared with the same period of the previous year.

In terms of accounts receivable, 19H1 company’s revenue account 9.

700 million, an increase of 2 every year.

4%, turnover days increased from 4 days to 46 days in decades.

Operating cash flow improved significantly, with net operating cash flow of the company in 19H15.

0.5 billion, compared with -1 in the same period last year.

07 billion, a significant improvement, mainly due to the increase in cash received from sales of goods and provision of labor services during the period.

5. Independent brands + ODM drive domestic sales growth, and the incentive plan helps the domestic market development. Overall, the company’s domestic sales revenue accounts for about 19%, of which independent brands account for 60% -70%, and ODM accounts for 30% -40%.

In terms of independent brands, in recent years, the company has actively used the advantages of its own product technology service platform, adopted professional brand operation strategies, and vigorously developed its own brand business.

At present, the company has formed a multi-brand matrix of Donlim, Morphy Richards, Barsetto, Laica, and gradually moved to home care appliances (such as vacuum cleaners), baby appliances, and beauty care.Expansion of electrical appliances (such as electric toothbrushes, etc.).

In terms of domestic sales OEM, the company has now strengthened cooperation with Internet companies, such as Xiaomi, Mingchuang, Pinduoduo, etc.

The main cooperation with Xiaomi related units is water purifiers, electric kettles, electric toothbrushes, ovens, etc. At present, there are certain scale products mainly water purifiers and 北京夜网 electric kettles.

At present, the company is actually cooperating with Xiaomi’s hardware company. From the perspective of the product line, there is still room for cooperation, such as coffee machines, thermos cups, etc. There are already several product projects under negotiation with Xiaomi.

It is expected that the company’s domestic OEM millet business will still have a growth rate of nearly 20% in 2019.

At the same time, the company released an annual performance fund incentive plan to motivate and assess the annual domestic main business income.

The performance assessment must also meet: 1) Based on 18 years, the net profit margin of the assessment in 19-21 is not less than 15%, 30%, 45%.

2) Based on the 18 years, the decrease in domestic main business income in 19-21 is not less than 20%, 40%, and 60%, respectively.

After meeting the assessment conditions, the assessment incentives can be accrued. The incentive amount is 30% of the difference between the net profit of the assessment in that year and the 18-year return to the mother’s net profit, up to a maximum of 40 million.

Higher assessment conditions demonstrate the company’s confidence in development, and the incentive plan binds the interests of employees and the company, which will better promote the rapid development of the domestic market business.

Investment suggestion: We are optimistic about the company’s steady growth in the export market in 2019 and the outbreak of independent brands in the domestic market.

We estimate that the company’s revenue from 2019 to 2020 will be 90 billion and 9.8 billion, respectively, and it will increase by 7% and 9% in the future, and its net profit will be 6 respectively.

10 billion, 6.

9 billion, an increase of 19 years.

35%, 15.00%, corresponding to PE is 15.

6X, 13.

6X, maintain “Buy” rating.

Risk warning: Sino-US trade conflicts intensify; adverse exchange rate fluctuations; less-than-expected promotion of independent brands