Tongrentang (600085): Relatively estimated at the bottom of history, reform expectations continue to rise

Tongrentang (600085): Relatively estimated at the bottom of history, reform expectations continue to rise

Prominent historical trends and short-term development trends.

Tong Ren Tang was founded in 1669 and has a history of 350 years. It has survived through the Qing Dynasty, the Republic of China and New China.

“Although processing is complicated, you will not dare to save labor, but your taste is expensive, but you will not dare to reduce material resources.” It has achieved the connotation of Tongrentang’s “highest quality” brand.The first “China Well-known Trademark” (No. 001), the official endorsement has earned Tongrentang a long history.

In addition, since 2002, Tongrentang’s profit growth has lagged behind those of Yunnan Baiyao, Dong’e Ejiao, Pien Tze Huang, and other comparable companies; the bee industry incident will certainly damage the brand image.

The company’s short-term development encountered some setbacks.

The new chairman of the group headquarters took office, and the capital market looks forward to positive changes.

Since the establishment of the Tongrentang Group in 1992, the Group has a high degree of autonomy in terms of management and appointment and removal of cadres.

The main leaders such as Yin Shunhai and Mei Qun have reorganized the internal growth of Tongrentang Group and promoted their appointments. They have also achieved excellent results in the past 20 years.

After the bee industry incident, Wang Guiping took the new role and became the first externally appointed chairman in history.

The capital market looks forward to positive change.
The performance growth is highly certain: the release of industrial capacity and the increase in commercial retail gross profit margin.

Due to the construction and relocation of Daxing production base, the company’s production capacity has been fully released in the past few years, and some products have been out of stock.

The Daxing production base has already achieved partial production in 2018. We believe that industrial revenue growth is expected to accelerate in the next 3 years; the company currently has 808 retail stores in China, of which 389 have established TCM medical clinics, which has increased user stickiness.

The gross profit margin of Dashenlin, which is similar to the company’s business model, is about 40%. It is expected that there will be room for the gross profit margin of the company’s commercial sector to increase after rationalizing the mechanism.

Relative to the expected bottom area, the group’s personnel changes have brought about reform expectations, and for the first time, it has been assigned a “Buy” rating.

The company’s relative estimate for the past ten years is about 44 times PE. Due to a series of events, the performance growth rate is currently estimated to be in the bottom range.

The personnel changes of the Group are expected to bring about an improvement in reform expectations and an increase in subsequent performance growth. We predict that the company’s net profit attributable to mothers will be 12 in 2019-2021.

7 billion, 14.

4.3 billion, 16.

53 ppm, corresponding to PE multiples of 34x, 30x, and 26x, respectively, covering the first time with a “Buy” 南京夜网论坛 rating.

Risk reminder: short-term performance falls short of expectations due to personnel adjustments

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