Fuling Mustard (002507) Annual Report 2018 Review: Channel Adjustment Ready Profitability Steady Increase

Fuling Mustard (002507) Annual Report 2018 Review: Channel Adjustment Ready Profitability Steady Increase

Performance review: FY18 performance was in line with expectations.

In FY2018, total operating income was 19.

1 ‰, +25 per year.

9%; net profit attributable to mother 6.

6 trillion, +59 a year.

8%, EPS per share is 0.

84 yuan.

Of which 18Q4 income 3.

7 trillion, +25 a year.

9%, net profit attributable to mother 1.

4 trillion, +25 a year.


FY18 gross profit margin 55.

8% per year +7.

5pcts; net 南宁桑拿 interest rate 34.

6%, +7 per year.


The company intends to pay a cash dividend for every 10 shares2.

6 yuan (including tax), dividends implanted 31.


Channel adjustment gradually realized benefits, and Q4 revenue growth picked up from the previous month.

The company has effectively increased the market share of Wujiang and Huitong through the model of “high cost + high price + high gross profit + selling boutiques”.

The 18Q4 company’s revenue improved significantly from the previous month, mainly due to: 1) Active adjustment of sales policies: The promotion of crispy products at the beginning of 18 had weakened, resulting in a decrease in the growth rate of crispy products.Sales growth returned to normal; 2) Channel inventory was de-allocated, and the pace of reorganization improved: The company implemented a “flooding flood” policy in 18Q2, resulting in a large number of dealers’ inventory, and a high base of 17Q3 was added.Later, the 18Q4 sales were benign; 3) Price increases prevented regional product channeling: 18Q4 companies raised the prices of seven products by about 10%, gradually unified the national price, and reduced the impact of cross-regional channeling on high-price regions.

By region, the income of South China is 5.

600 million, an increase of 14.

3%, North China increased by 41.

1%, the growth rate of the rest of the region is more than 30%, of which 18H2 South China region income +10 per year.

4%, the growth rate in the southwest and northeast regions is the number, the growth rate in other regions is about 20%.

The effect of price increase and structural optimization is obvious, and the profit margin is significantly improved.

The company’s highest gross profit margin is 55.

7%, a substantial increase of 7 per year.

4pcts, mainly from the product price increase and product structure improvement, including optimization of 23 crispy shredded vegetables, crispy mustard, etc., newly developed 22g small crispy mustard, and 400g pickled radish, pickled cabbage, pickled bamboo shoots and 4 new products;In terms of business, mustard is the main source of incremental income, with a gross profit of +49 per year.

2%, gross margin is 57.

4%, ten years +8.

7 pieces, kimchi gross margin +14 for ten years.

9%, gross margin is 44.

34% a year -1.

7.On the expense side, the company’s selling expenses are 2.

800 million, +27 a year.

9%, sales expense ratio 14.

7%, +0 per year.

2pct, the main increase comes from marketing and brand promotion fees, which has reached 1 in the long run.

3.4 billion, up from +69.


The initial company net margin was 34.

6%, +7 per year.

3 items, of which 18Q4 net profit was 37.

5%, excellent profitability performance.

Production capacity is steadily expanding, channels are sinking, and new product promotion is still the focus of the future.

In 18 years, the company’s production capacity was tight, and currently it is under construction to produce 5 kimchi and 5 annually.

3 initial bagged mustard and 1.

6 Initial production line of crispy mustard, etc., to further increase production capacity.

In terms of channels, the future increase mainly comes from the deep sink of third- and fourth-tier channels. In 19 years, the company will pay more attention to sales to increase the city’s share. It is expected that short-term sales expenses will increase.

At the same time, the company continued to promote the upgrade of Xiaowujiang to Dawujiang, branding radish, pickles, and meals with Wujiang brand assets, and transferred brand power to further promote the expansion of new categories.

Profit forecast and investment advice: As a leader in segmented industries, the company’s product price increase and high net interest rate reflect strong pricing power. It is expected to continue to expand and expand through category expansion and continuous channel sinking, and maintain a high level of profitability.

We slightly adjust the company’s EPS forecast for 19-20 to 1.


26 yuan (the original predictor variable is 0.


16 yuan), and dating 21 years EPS forecast is 1.

52 yuan, corresponding PE is 28/23/19 times. With reference to the evaluation level of condiments and the company’s good long-term growth, we give 30 times PE for 20 years, and raise the target price to 37.

8 yuan, maintaining the “strong push” level.

Risk warning: the risk of fluctuations in the price of first-class raw materials of vegetables; the promotion of new products does not meet expectations; food safety risks.