\u3000\u3000 Shanghai Milkground Food Tech Co.Ltd(600882) (600882)
Event overview
The company released the performance forecast for 2021. It is estimated that the net profit attributable to the parent company in 2021 will be 140-180 million yuan, a year-on-year increase of + 136% - 204%. In 2021, the amortization of share based payment expenses was 132 million yuan. Q4 net profit attributable to the parent company was - 3.4 million yuan - 36.65 million yuan, a year-on-year increase of - 152% - + 471%.
Analysis and judgment:
1. It is expected that the new round of advertising investment will make 4q21 profit lower than expected. We had expected a net profit of 300 million yuan in 2021, and the actual net profit of 140-180 million yuan was lower than our expectation. On November 15, 2021, the company updated the advertising film and added the whole product line publicity such as normal temperature cheese stick, adult cheese bar and masurila into the new advertising film. The new advertising film made a strong landing in Focus Media Information Technology Co.Ltd(002027) across the country, and successively landed on major channels of China Central Television and satellite TV, thousands of cinemas across the country, Shanghai Metro TV and other media. At the end of 2021, the company launched a new advertising film for the Spring Festival gift box, and sponsored the New Year celebration program of Oriental satellite TV; In early January, Me Yoko, a member of the tiktok, joined the actor in the promotion of the Spring Festival gift box through the shaking platform. On January 14, Shanghai Milkground Food Tech Co.Ltd(600882) 2022 New Year blockbuster of Zhixin good gifts was released; On January 22, it was exclusively titled as the variety show "Chaotong world" of Oriental satellite TV. Since the normal temperature cheese stick was listed at the end of September 2021, the company has entered a new round of advertising stage; Before the Spring Festival, focus on shaping the gift attribute of normal temperature cheese stick. We judge that Q4's increased investment in advertising expenses and pre investment before the Spring Festival are the main reasons for Q4's lower profit than previously expected.
2. Keep optimistic expectations for 1q22 considering the cost front effect. In the past, Shanghai Milkground Food Tech Co.Ltd(600882) low temperature cheese sticks occupied the minds of consumers by relying on strong and focused advertising and marketing. Therefore, they gained terminal dynamic sales performance that continued to be better than competitive products, which verified that brand marketing is a very important starting point in the business model of children's cheese sticks. We believe that the listing of normal temperature cheese sticks opens up a large single product space for children's cheese sticks. At the beginning of listing, the overweight advertising and marketing expenses are in line with the company's consistent strategy and help consolidate the company's first mover advantage in normal temperature business. In the short term, we expect that the intensive advertising and marketing investment before the Spring Festival is expected to achieve better sales performance of the Spring Festival and even 1q22, and the profit margin of 1q22 is expected to be better than that in the same period last year.
Investment advice
According to the performance forecast for 2021, we lowered the revenue forecast for 2021-23 from 46 / 72 / 96 to 46 / 66 / 8.5 billion yuan and the net profit attributable to parent company forecast for 2021-23 from 30 / 7.1 / 11.4 to 167 / 53 / 970 million yuan. The share price of 2021 / 1 / 26 is 45.68 yuan, corresponding to 141 / 45 / 24 times of P / E from 2021 to 23 respectively. We still maintain expectations for normal temperature business and cautious expectations for profits, and downgraded from buy rating to overweight rating.
Risk tips
① the sales of new products at normal temperature is less than expected; ② Market competition intensifies risks; ③ Food safety issues.
