Shanghai Milkground Food Tech Co.Ltd(600882) (600882)
Company profile
Mengniu holdings cheese leader, repurchase for equity incentive. As of July 9, 2001, Mengniu held 147 million shares, accounting for 28.47%, becoming the controlling shareholder of the company. On December 1, 2001, the company issued a repurchase announcement and planned to repurchase 5-10 million shares at a price of no more than 79.39 yuan / share for the implementation of equity incentive plan or employee stock ownership plan.
High income growth, performance release, and expenses remained stable during the period. Benefiting from the large-scale rise of the cheese stick Market and the company’s leading position, the company’s 21q1-3 revenue was 3.14 billion yuan, a year-on-year increase of 68%. The rhythm of performance release was steady. The company’s 21q1-3 realized a net profit attributable to the parent company of 140 million yuan, a year-on-year increase of 171%. Benefiting from the rapid growth of high margin cheese, the gross profit margin of 21q1-3 company rose to 37.8% and the net profit margin rose to 5.0%. As the development of cheese stick market is still in the stage of horse racing and enclosure, the company’s sales expense rate remains high, 21q1-3 is 24.4%. During the period of 18-21 q1-3, the expense rate of the company remained stable, and the sales + Management + Finance + R & D expense rate remained stable at about 33-34%.
Industry analysis
Dairy consumption continues to upgrade, and cheese penetration is increasing. The growth rate of cheese market far exceeds the overall growth rate of dairy industry. It is expected that after the launch of the new national standard, leading enterprises are expected to further improve their market share.
BC needs two wheel drive, and local leaders rise strongly. Compared with overseas countries, the proportion of C-end of Chinese cheese is expected to increase. In China’s cheese market (B + C total), the market share of Shanghai Milkground Food Tech Co.Ltd(600882) brand has rapidly increased from 3.9% in 18 years to 27.7% in August 21, surpassing Briggs & Stratford and ranking first in the industry.
Ten times the space of the 100 billion market, and the giants enter and expand together. Based on the calculation of per capita consumption and penetration rate, we judge that the future 100 billion cheese market can be expected, which corresponds to at least ten times the current space. Using the two methods of penetration and terminal network effort, we made a multi scenario analysis and calculation on the market space of constant + low temperature cheese sticks. Under the neutral assumption: we judge that the steady-state market space (sales caliber) of constant + low temperature cheese stick is about 40 billion, which is converted to the statement caliber of about 26 billion.
Advantage barrier
Brand building is deeply rooted in the hearts of the people and the ability to win customers continues to improve. Multi channel and multi-media, all-round brand construction. Classified precision marketing to seize the user’s mind. Promote cheese education and broaden consumption scenes.
Low temperature is stable and normal temperature is accelerated, and Chinese cheese is stable and far away. Refined at low temperature, positioning high-end structure upgrading. Make a wide range of cheese snacks at room temperature. Seize the opportunity to strengthen the family dining table and catering industry series.
Expand encrypted offline channels and continue to develop online e-commerce. Promote national layout and expand weak markets. Encrypt offline outlets and continue to make efforts online. Normal and low temperature do not overlap, and new increment is made at normal temperature.
Investment advice
We estimate that the net profit attributable to the parent company from 2021 to 2023 will be RMB 300 million, RMB 650 million and RMB 930 million respectively, with growth rates of 406.8%, 116.2% and 43.8% respectively; EPS is 0.6, 1.3 and 1.8 yuan / share respectively. The current share price (closing price of 62.46 yuan / share on December 10, 2001) corresponds to PE of 107, 50 and 35x from 2021 to 2023. We are optimistic that the company’s normal temperature cheese stick business will open the second growth level and maintain the “buy” rating.
Risk tip: the dynamic sales of normal temperature products are less than expected; the market competition of low-temperature products is more than expected; the penetration of other cheese products is less than expected.
