Jiajia Food Group Co.Ltd(002650) (002650)
The condiment track has a broad space, and the structural upgrading trend of sauce and oil industry is clear. In 2020, the factory scale of China’s condiment industry will be about 330 billion. Benefiting from the high popularity of the catering industry and the upgrading of residents’ consumption, the condiment industry is expected to continue to rise in both volume and price for a long time, and the industry is expected to maintain a growth of about 10% in the next 3-5 years. Soy sauce is the most important sub industry in the condiment industry, with a factory scale of nearly 60 billion in 2020. Judging from the upgrading process of Japanese soy sauce, China’s soy sauce industry is currently in the period of structural upgrading. In the next stage, consumers will pay more attention to health and quality. The high-end soy sauce market in which the concept of “salt reduction” soy sauce is located has great development space. According to our calculation, the factory scale of high-end soy sauce industry is expected to reach 29.1 billion in 2022; In the future, with the improvement of Chinese residents’ income and the continuous improvement of their attention to health, it will create conditions for the continuous structural upgrading of China’s soy sauce industry. Compared with Japan, China’s high-end soy sauce still has a large growth space for a long time.
The company is brilliant in leading industry innovation and lost in diversified investment. 1) Brilliance: the innovative spirit created Jiajia Food Group Co.Ltd(002650) , “bottle cap innovation”, distinguishing the concept of “raw and old pumping” and other innovations led the industry trend. The advanced marketing strategy led the company from the region to the whole country, with a revenue of cagr40 from 1997 to 2011 8%； 2) Lost: after listing, the company’s revenue increased from RMB 1.66 billion to RMB 2.07 billion in 2012-2020, and the net profit attributable to the parent basically fluctuated around RMB 180 million. The revenue / profit CAGR in 2012-2020 was 2.8% / 0.03% respectively. Over the past decade, the company’s slow growth was mainly due to diversification strategic investment, which dragged down the development of the main seasoning industry. The chairman delegated power to professional managers, resulting in strategic loss and missed the dividend period of industry development. The company lagged far behind the leader Haitian in the industry competition and was surpassed by the Challenger Qianhe. Family operation led to the failure of internal supervision and frequent violations. The company was once rejected by St. In July 2021, after the controlling shareholder repaid the debt, all the external illegal guarantees of the listed company were lifted, and the company was able to successfully “take off its hat” and go into battle with light gear.
It is not too late to set sail again, focusing on profound changes in the main business. The main lines of the company’s reform are as follows: 1) product focus: promote the “12345” product strategy, build a pyramid product matrix, focus on high gross profit products, and focus on salt reduction single products; 2) Channel development: consolidate the stock market, actively optimize the dealer structure, accelerate the coverage of terminal outlets, and accelerate the expansion of traditional channels; Develop tiktok market, new layout (new channel, such as jitter, red book, group purchase, catering, etc.); 3) management transformation: profound change in organizational structure, linear organization to matrix organization, additional business department, integration of supply chain, and significant improvement of management efficiency; 22 years’ double performance assessment of revenue and performance of branches, and company profit can be released.
One sentence recommendation logic
Jiajia Food Group Co.Ltd(002650) known as the “first stock of soy sauce on the market”, it has returned to the main seasoning industry and focused on the large single product of “salt reduction” soy sauce since 19. 21 years is the year for the company to deepen the reform and layout. With the recovery of terminal demand in the industry in 22 years, the dynamic sales and channel expansion of the company’s large single product of “salt reduction” soy sauce are expected to drive the performance to exceed expectations.
Our perception of the market is different
The market believes that the company missed the dividend of high fresh soy sauce in the industry and the competition will become fierce in the future. Although the company has changed, it has doubts about the bottom reversal ability of the company. We believe that since 19 years, the company has clearly focused on the main business of condiment and the large single products of ‘salt reduced’ soy sauce, matching channels and organizational structure changes, and the company has set sail again. Based on: 1) the company’s innovation gene remains unchanged: in 2016, the state proposed that the per capita daily salt consumption should not exceed 5g, and the “9.15” salt reduction week should be established in 2019. The company is the first enterprise in the industry to put forward the concept of salt reduction and launch single products. It has technical patents to reduce salt and ensure the improvement of freshness. On the basis of reducing salt by 30%, the company retains the freshness and saltiness of soy sauce, The core selling point is “reduce salt but not fresh” “, the products have not changed consumers’ taste habit of pursuing high freshness, and the product education cycle is short; 2) the industry is at the outlet of healthy upgrading: in the past, each round of product upgrading will drive the change of industry pattern. The company once missed the large-scale dividend of high freshness soy sauce in the previous round. Under the background of this round of healthy industry upgrading, it is imperative for the company to restart the rise by relying on large salt reducing products; at this stage, the soy sauce industry CR3 only 33% (Haitian 21%), “salt reduction” concept track competitive product layout is not perfect, and it is still a blue ocean competition pattern within 1-2 years, and the company is expected to stand out; 3) strategic focus and playing method are clear: the salt reduction product matrix is perfect, covering catering and residential channels, and covering all price bands, which can be attacked and defended. The company tilts resources for investment, and the channel profit space is 10% – 15% higher than that of general products %At the same time, additional rebates are given to dealers to ensure sufficient channel thrust. At this stage, we will focus on promoting the dynamic sales in the multi billion market and high-speed wire market, and create various model dynamic sales models, which are expected to be replicated nationwide next year; 4) Provide bottom support for organizational structure change: specially set up salt reduction division to focus on assessing the proportion of salt reduction products; Integrating the supply chain department, improving the efficiency of front office operation and service, accelerating the delivery speed and reducing the inventory pressure of dealers will help to improve the willingness of dealers to cooperate.
The market has doubts about the accelerated release of profits in 22 years. We believe that the poor profit in 21 years is mainly due to the increased cost investment under the background of intensified competition to maintain market share, but the company’s salt reduction and other high gross profit products still achieve good growth in adversity. With the improvement of terminal demand in the future, it is expected to usher in a profit inflection point in 22 years. Based on: 1) 21 years is the year for the company to deepen reform and layout; In the past 19 years, the company focused on solving the problem of product structure, and in the past 20 years, the company deepened product adjustment & motivating the sales force, Focus on solving management problems in the 21st year (bottom support), which lasted for 3 years and brought strong support for the release of 22 years’ performance; 2) the realization path of equity incentive objectives is clear: ① revenue side: mobile sales of large single products and channel expansion are expected to drive the rapid growth of revenue; ② profit side: product structure upgrading, superimposed product price increase to drive the ton price increase, which will effectively alleviate the pressure of raw material price increase; revenue growth is diluted The fixed asset cost, combined with the efficiency improvement brought by the organizational structure adjustment, is expected to be fully reflected in 2022. Due to comprehensive revenue growth and expense control, it is expected that the company’s performance will be flexible in 2022 driven by the company’s continuous cost reduction and efficiency increase.
Profit forecast: we expect the revenue growth rate from 2021 to 2023 to be – 22.0% / 27.5% / 22.5% respectively; The growth rate of net profit attributable to parent company was – 90.6% / 1128.6% / 23.9% respectively; EPS is 0.01/0.18/0.22 yuan / share respectively; The current price corresponds to 34 / 28 times PE from 2022 to 2023. Give the target valuation of 45xpe in 2022, corresponding to the target price of 8.1 yuan and the current price space of 33%, and give the “buy” rating for the first time.
Risk tip: competition in high-end soy sauce industry intensifies; The channel expansion progress is lower than expected; Rising raw material prices; Food safety risk
