Baby-friendly Room (603214) 2019 First Quarterly Report Review: Stable Growth and Expansion

Baby-friendly Room (603214) 2019 First Quarterly Report Review: Stable Growth and Expansion

The report guides the company’s revenue in the first quarter of 20195.

4.5 billion (+13.

21%), net profit attributable to mother is 1776.

320,000 yuan (+46.

44%), net profit after deducting non-attribution is 1,447.

570 thousand yuan (+24.


Key points of investment: The income has grown steadily, and milk powder sales remain the main source of income.

45 ppm, an increase of 13 in ten years.

21%, according to the mode, the growth rate has improved by a quarterly decline in wholesale business 63.

89%, which is related to the purchase time of the brand, which will be reflected in the next few quarters.

Offline stores are still the main source of sales revenue, accounting for more than 90%, and will increase by 16 in the future.


The growth rate of e-commerce revenue has accelerated, with an increase of 84 in ten years.


In terms of products, milk powder is still the largest contributor to revenue.

Milk powder revenue in the first quarter2.

62 ppm, an increase of 18 years.

73%, revenue accounted for more than 50%; income from 无锡桑拿网 supplies was 1.

400 million, an increase of 10 in ten years.

57%, revenue accounted for 25.


The profit growth rate is faster than the income growth rate, mainly due to the increase in gross profit margin. In the first quarter of 2019, the company’s net profit attributable to its mother was 1776.

320,000 yuan, an annual increase of 46.

44%, net profit after deduction is 1447.

570,000 yuan, an annual increase of 24.


Non-recurring gains and losses mainly come from wealth management income, and the growth rate after deduction is higher than income growth mainly due to the increase in gross profit margin.

The company’s consolidated gross margin for the first quarter was 26.

46%, an annual increase of 1.

32 pct, of which the core product milk powder gross margin is 20.

49%, an annual increase of 4.

89 pct, mainly due to the company’s milk powder sales in the high gross profit margin of ultra-high-end milk powder increased proportion, the gross profit margin of supplies was 19.

39%, an annual increase of 0.

53 pct, mainly because the company increased the proportion of diapers with higher gross profit.

The expense ratio increased slightly during the period, increasing by 1 every year.

29 pct, mainly due to the increase in rental expenses of newly opened stores, the related sales expense ratio increased.

The store expanded steadily, and endogenous + extension helped to continue to improve future performance. In the first quarter of 2019, the company opened 6 new stores and closed 5 stores. In the second to fourth quarter, 19 stores have been signed for opening and it is expected to open 50-60 new stores.The net growth of stores is expected to exceed 40.The structure of newly opened stores has been optimized, the proportion of mall stores has gradually increased, and the proportion of street stores has decreased. The newly opened stores are located in the Yangtze River Delta and Fujian.

The store opening will accelerate in 2019, with plans to open 50-60 new direct-operated stores, mainly to accelerate the expansion of the South China region.

At the same time, the company actively expanded through outsourcing mergers and acquisitions in different locations. On November 30, 2018, it announced that it would invest in Chongqing Taicheng, and on March 26, 2019, a transfer and capital increase agreement. The company will then use this as a base to expand into the southwest region.

Earnings forecasts and estimates predict that the company will achieve revenue in 2019-2021.

85, 29.

03, 33.

82 ppm, an increase of 16 in ten years.

36%, 16.

83%, 16.

50%, net profit attributable to mothers is 1.

48, 1.

84, 2.

26 ppm, an increase of 23 in ten years.

50%, 24.

50%, 22.

70%, the current sustainable corresponding PE for 2019-2021 is 27.

4, 22.

01, 17.

94. The company is currently a scarce and high-quality listing target in the mother and infant retail industry. Considering the certainty of the company’s performance growth and the industry’s huge space, it is given an “overweight” rating.

Risks suggest less-than-expected store expansion