\u3000\u3000 Jiangsu Hengshun Vinegar-Industry Co.Ltd(600305) (600305)
The company announced the performance forecast of 2021: it is expected to realize the net profit attributable to the parent company of RMB 115-145 million in 2021, a year-on-year decrease of 53.9% – 63.4% in 2020 (restated, the same below), and it is expected to deduct non net profit of RMB 95-125 million, a year-on-year decrease of 56.2% – 66.7%. According to this calculation, the net profit in the fourth quarter of 2021 is expected to be – 1965 to 10.35 million yuan, a year-on-year decrease of 87.7% – 123.4%.
Terminal consumption is weak, marketing expenses are increased, and the annual performance is under pressure. Vinegar accounts for nearly 70% of the company’s main revenue. Its sales areas are mainly in East and South China, and supermarkets are the main sales channels. In 2021, Shangchao was greatly impacted by the epidemic and community group purchase. According to the data of Muding, the company’s Vinegar sales in Shangchao in 2021 decreased by 13.46% year-on-year, and the total sales decreased by 8.09%, putting pressure on the company’s revenue. The company accelerated the national layout, promoted the marketing reform, strengthened the brand and channel promotion, increased the cost investment, and the performance decreased significantly.
Marketing reform, product price increase, waiting for the inflection point of operation. In terms of products, the company focuses on creating “three swordsmen” of vinegar, cooking wine and sauce, enriching the types of products and gradually getting rid of the dependence on a single category of vinegar; In terms of marketing, the company actively introduces external talents, newly appoints marketing and operation directors, constantly explores and constructs new models, new categories and new platforms, and accelerates the growth and rise of new retail forces. Since November 20, 2021, the company has raised the price of some products by 5% – 15%. The transmission of price increase and the landing of terminals still need to be continuously observed, waiting for the inflection point of enterprise operation.
Complete the repurchase for equity incentive, increase and expand production in a fixed manner, and open up long-term development space. In August 2021, the company completed the repurchase of 10.02 million shares at an average price of 17.29 yuan / share, which is intended to be used for equity incentive. At the same time, it actively promoted the acquisition of minority shareholders’ rights and interests of holding subsidiaries. The organizational structure and incentive mechanism are expected to continue to improve in the future. In November 2021, the company issued a non-public offering plan and planned to raise 2 billion yuan to increase the production capacity of black vinegar, white vinegar, cooking wine, sauce wine, compound blending and other products, so as to open up the long-term development space of the company.
Investment suggestion: we estimate that the operating revenue of the company from 2021 to 2023 will be RMB 1803 million, RMB 2216 million and RMB 2619 million respectively, and the net profit attributable to the parent company will be RMB 136 million, RMB 258 million and RMB 372 million respectively. The non-public offering will not be considered temporarily, and the EPS will be RMB 0.14, RMB 0.26 and RMB 0.37 respectively. The current share price corresponding to PE is 97, 51 and 35 times respectively. Considering that the company still faces competitive pressure in the short term, The release of new capacity is uncertain and is lowered to the rating of “prudent recommendation”.
Risk warning: the epidemic situation repeatedly affects consumption; Intensified market competition; Food safety accident
