\u3000\u3000 Jiangsu Hengshun Vinegar-Industry Co.Ltd(600305) (600305)
Key investment points
Event: the company issued a performance forecast for] 2021. It is expected to realize a net profit attributable to the parent company of 120 million yuan to 150 million yuan, a year-on-year decrease of 63.4% to 53.9%; It is estimated that the net profit attributable to the parent company in Q4 is – 19 million yuan to 11 million yuan, a year-on-year decrease of 123.1% to 87.4%.
The epidemic repeatedly impacted the advantageous sales areas, and the main business income was under pressure. The company’s income has declined in the past 21 years, which is mainly affected by the following factors: 1) the frequent sporadic epidemic has damaged consumer demand. The total revenue of the company’s two main sales areas, East China and South China, accounted for more than 70%, and the advantageous sales areas were seriously impacted by the epidemic. 2) The emerging channels represented by community group buying have impacted the traditional Ka channels. In terms of sub channels, 70% of the company’s product sales are concentrated in the supermarket channel. Under the influence of low price competition of community group purchase and the epidemic situation, the customer flow of the supermarket channel has decreased significantly. 3) Frequent capacity expansion and intensified industry competition. At present, the major giants in the industry have accelerated the pace of product expansion and category expansion. The company’s vinegar products contribute about 70% of the revenue. The product structure is relatively single, and the competition in the seasoning industry is fierce, resulting in the pressure on the revenue end of the company in 21 years.
Raw material costs and expenses rose sharply, and the profit side fell. The overall profitability of the company has declined in the past 21 years: 1) the prices of main raw and auxiliary materials such as packaging materials continue to rise; 2) The company accelerated the nationwide layout and actively promoted the marketing reform: it strengthened the brand publicity and increased the brand exposure by naming “if you are the one”, and the publicity expenses increased; Actively promote channel reform, and the company increases channel fee investment. Under the comprehensive influence of the intensification of raw material costs and investment, the profitability of the company in 21 years is significantly under pressure.
A number of reforms go hand in hand, and the fundamentals are gradually improving. Based on the long-term, the company has launched a number of reforms in view of the existing problems: 1) in terms of products, the company has launched Product-Side reform in 21 years to strengthen the existing advantages of basic condiments; Gradually develop compound condiments. At present, braised meat and sour soup fat beef sauce bag have achieved tens of millions of income. 2) In terms of channels, catering channels continue to penetrate with the help of the company’s strong brand strength in East China; Propose e-commerce multiplication plan for new retail channels; Strengthen the construction of circulation channels in areas with weak brand strength. 3) Deepen the reform of internal management mechanism: introduce market-oriented talents from outside to improve efficiency; Strengthen internal talent training management and establish a 22-year talent echelon training plan; 4) In terms of production capacity, the company issued a fixed increase plan in November 21, adding 100000 tons of cooking wine and re adjusted production capacity. The production capacity expansion is progressing steadily, and it is expected to be completed and put into use in 2023; 5) In August 21, the company completed equity incentive stock repurchase, laying a solid foundation for the long-term and steady development of the company.
Profit forecast and investment suggestions. It is estimated that the EPS from 2021 to 2023 will be 0.15 yuan, 0.19 yuan and 0.25 yuan respectively, and the corresponding dynamic PE will be 91 times, 69 times and 52 times respectively, maintaining the “hold” rating.
Risk tip: price fluctuation risk of raw materials and repeated covid-19 epidemic risk.
