\u3000\u3000 Springsnow Food Group Co.Ltd(605567) (605567)
Chicken conditioning industry pioneer, long-term operation steadily upward. At present, the company is one of the few Chinese white feather chicken processing enterprises specializing in the production and sales of white feather chicken deep-processing conditioning products. In 2019, the market share of the company's chicken conditioning products reached 4.1%. The company's revenue in 2020 was 1.86 billion yuan, and the CAGR of revenue in 2017-2020 was 11.8%. By Q3 of 2021, the company had achieved a total revenue of 1.561 billion yuan, with a year-on-year increase of 14.42%. In the company's latest performance forecast, due to the sharp rise in the price of raw materials such as corn and soybean meal, which affected the rise of feed cost, the downturn of chicken fresh product market and the large fluctuation of US dollar exchange rate, the company had achieved a net profit of 63-71 million yuan in 2021, with a year-on-year decrease of 52.17% - 57.56%, At the same time, the impact of demolition compensation in 2020 leads to a high base, and the performance base will return to normal in 2022.
The income of conditioning products increased rapidly and gradually transformed into food consumption enterprises. The company has been deeply engaged in the field of chicken conditioning products for nearly 20 years. In the early stage, the company mainly exported chicken conditioning products to Japan in strict accordance with the production standards imported from Japan, with outstanding product quality. The company adopts the entrusted breeding mode to ensure the stability of chicken source and cost, and realize that 90% of chicken comes from self supply. Since 2015, the company has gradually developed the Chinese chicken conditioning products market. By 2020, the revenue of the company's conditioning products will reach 1.009 billion yuan, accounting for 54.1%, and the revenue CAGR of conditioning products from 2017 to 2020 will reach 40.5%. The company's current products are mainly for export (Japan, the European Union, etc.), large chain restaurants (Dicos, Wallace, etc.), electricity suppliers, supermarkets (Jingdong, Tmall, Jiajiayue Group Co.Ltd(603708) , etc.), convenience stores (Rosen, family, etc.), wholesale and retail channels. The main categories include chicken rice flowers, spicy chicken, crispy chicken rings, spring snow chicken nuggets, etc., most of which are customized products with high customer stickiness.
The production expansion of raised investment projects is imminent, providing scale guarantee for the expansion of market share in the future. At present, the company has an annual production capacity of 72000 tons of conditioning products and an annual slaughtering capacity of 54 million broilers. However, the capacity utilization rate of the company has continued to rise in recent years. In 2020, fresh products will be basically produced at full capacity, and the capacity utilization rate of conditioning products will be 88%. At present, the existing capacity scale of the company can not meet the future development needs. The company went public through IPO on October 13, 2021, raising a total of 590 million yuan to build a new project with an annual production capacity of 40000 tons of chicken conditioning products, an annual slaughtering project of 50 million broilers, a breeding demonstration base of 800000 broilers, and marketing brand promotion projects. It is expected to be gradually built and put into operation by the end of this year, so as to provide scale guarantee for the improvement of market share in the future, It is expected to further enhance the influence of the company's food consumption brand.
Profit forecast and investment rating: we expect that the company's EPS from 2021 to 2023 will be 0.34, 0.43 and 0.58 yuan / share respectively, and the corresponding PE will be 46 / 37 / 27 times respectively. At present, China's chicken conditioning products market is highly fragmented, and chicken food is in line with the healthy consumption trend. The company has built a strong first mover advantage in products and channels. With the raising and investment of production capacity projects in the future, it is expected to further seize the market share of chicken conditioning products and achieve faster growth. For the first time, give a "overweight" rating.
Risk tips: 1) the production capacity is lower than the expected risk; 2) Poultry disease risk; 3) Risk of sharp rise in raw materials; 4) Risk of large fluctuation of exchange rate; 5) Food quality and safety risks; 6) Economic downside risk.
