Lao Fengxiang (600612) Quarterly Report Comment： Benefiting Gold Price Rise 3Q19 Performance Exceeds Expectations
Lao Fengxiang (600612) Quarterly Report Comment: Benefiting Gold Price Rise 3Q19 Performance Exceeds Expectations
Benefiting from the rise in the price of gold, the 3Q19 performance exceeded expectations. The company released the third quarter report of 2019, and the 3Q19 single quarter achieved annual revenue of 140.2.4 billion, an annual increase of 24.59%; net profit attributable to mother 4.2.7 billion, an annual increase of 26.26%, exceeding market expectations.Breaking down volume and price factors, the third quarter 南京夜网 of 19 mainly benefited from the increase in the price of gold on the price side, and gold sales fell slightly by 2% compared with the same period last year.In the third quarter of 19, operating cash flow was -34.US $ 8.3 billion, mainly due to increased gold purchases: 3Q19 companies purchased 47 gold.5 tons, 2Q19 (27.8 tons), while the inventory increased by 5 compared with 2Q19.0.5 billion.Stores continued to expand, with a net increase of 133 stores to 3,722 in the third quarter of 3Q19. The gross profit margin increased by 0.49pp, benefited from rising gold prices and category optimization.49pp to 8.97%, mainly due to the rise in gold prices and the optimization of the category structure: the price of gold sold in the rising gold price range is higher than the purchase price of gold, which will boost the gross profit margin.The company increased the proportion of self-produced products and the proportion of fine products, and promoted the conversion of weighted gold to 5G gold with high gross profit margins, ancient gold and other fine gold, and improved profitability.In the third quarter of 19, the company’s sales expense ratio was maximized to 0.02pp to 1.49%, the management expense rate has increased in ten years.06pp to 0.76%, net interest rate increased by 0 in the short term.04pp to 3.04%. The gold and jewellery industry was weak in the third quarter, and the company benefited from the franchise model dividend. According to the company’s financial report, 3Q19 Chow Tai Fook directly sold 21% and 15% of gold in the same store separately; Luk Fook replaced 44% and 28% respectively.Reflecting the high price of gold, the economic downturn has restrained the sales of gold terminals to a certain extent.The third quarter of 19 has not been reflected in Lao Fengxiang’s report. Mainly due to the lagging of earlier terminals under the franchise mode, franchisees actively stocking under the trend of rising gold prices, and the performance of third- and fourth-tier cities to be first- and second-tier cities. It is expected to have adverse effects in subsequent quarters.But at the same time in the fourth quarter will benefit from the peak jewelry season, low base last year, the early Spring Festival and other factors.We expect net profit attributable to mothers to be 14 in 19-21.3, 16.5 and 19.0ppm, the corresponding growth rate is 18.3%, 15.5%, 15.5%.With reference to the comparable company’s estimated level and company performance growth rate, considering the top of the company and the brand premium, the company is given a 20-year PE valuation of 20 times and a reasonable value of 63 yuan / share. Maintain a BUY rating! Risks 无锡桑拿网 suggest that fluctuations in gold prices have led to the restructuring of gold jewelry demand; changes in raw materials have caused changes in gross profit margins; consumption habits have shifted from prime to non-prime categories; and a decline in high-end consumer sentiment has curbed gold jewelry consumption.