\u3000\u3000 Sichuan Teway Food Group Co.Ltd(603317) (603317)
Event: the company released the performance express of 2021, realizing a revenue of 2.03 billion yuan, a year-on-year decrease of 14.3%; The net profit attributable to the parent company was 180 million yuan, a year-on-year decrease of 51%. Among them, 21q4 achieved a revenue of 630 million yuan, a year-on-year decrease of 25.2%, and a net profit attributable to the parent company of 90 million yuan, a year-on-year increase of 123.2%.
Channel inventory has reached the lowest level, and weak consumption has put pressure on revenue. The company’s performance in the past 21 years has been under pressure, mainly due to 1) the frequent occurrence of sporadic epidemics across the country and the weak consumption willingness of residents in the short term; 2) The emerging channels led by community group buying disrupt the price and divert some consumers; 3) At the beginning of the year, the channel had a strong willingness to press goods. In the second quarter, the mobile sales slowed down, and the channel confidence was damaged. Since Q2, the company has opened channels to remove inventory from two aspects. On the one hand, the company has cleared the overstocked inventory in the channels by means of purchase, gift and promotion. On the other hand, the company has opened digital management, strictly controlled the delivery rhythm according to the dealer database, and put an end to stock up. Since the third quarter, the validity period of the company’s terminal products has been significantly shortened, the overall inventory of Q4 is at the lowest level in history, and the confidence of dealers has continued to improve since January 22. The company’s overall channel de stocking has achieved remarkable results. The superposition company has started raising prices for some Sichuan dispatching products in November 21. Under the low base effect, the company is expected to pack light and achieve rapid growth in 22 years.
The rise of raw material costs and the increase of fee investment have led to a decline in profitability. The overall profitability of the company declined significantly in the past 21 years, mainly due to: 1) the continuous rise in the prices of main raw materials such as packaging materials and oil; 2) The company continues to promote channel de inventory, and some complimentary products are included in operating costs to offset revenue; 3) The proportion of b-end customized meal transfer business with low gross profit increased, reducing the overall gross profit level; 4) The polyphonic industry has been pouring in new brands since 20 years, and the polyphonic industry is still in the primary stage of brand scuffle. The company has increased the investment of brand publicity and promotion expenses to seize market share.
The company’s various adjustments have been gradually implemented, and the fundamentals have improved significantly in the past 22 years. In the year of 21, the company entered the performance adjustment period and started reform in many aspects: 1) in terms of internal management mechanism, the organizational structure was adjusted in September, and the functions of strategic market center were delegated to all business divisions to further promote flat management; In terms of salary assessment, since the cancellation of equity incentive in July, the assessment mechanism has been adjusted, the basic salary level has been continuously improved, and the morale of the marketing team is stable. 2) In terms of channels, the inventory level returns to benign; The company controls investment attraction and pays attention to the quality rather than quantity of new dealers; Increase support for existing dealers and send salesmen one-on-one to realize empowerment. 3) In terms of products, the Dahongpao series product matrix will be improved in 22 years to accelerate the penetration into the sinking market. 4) In terms of production capacity, the company privately raised 1.63 billion yuan to build a food and condiment production base. The production capacity is expected to reach more than 250000 tons in 22 years, and the production capacity will be released steadily to ensure the company’s long-term competitiveness. Looking forward to the future, the polyphonic industry will grow steadily at a high speed of more than double digits, and small and medium-sized brands in the industry have accelerated their exit. As the leader of Sichuan flavor polyphony industry, the company is expected to achieve high performance growth in 22 years after the adjustment of various reform measures in 21 years.
Profit forecast and investment suggestions. It is estimated that the EPS from 2021 to 2023 will be 0.24 yuan, 0.39 yuan and 0.48 yuan respectively, and the corresponding dynamic PE will be 107 times, 65 times and 53 times respectively, maintaining the “buy” rating.
Risk tip: the risk of sharp fluctuations in the price of raw materials and the risk of repeated covid-19 epidemic.
