Foshan Haitian Flavouring And Food Company Ltd(603288) (603288)
The short-term negative interference factors in the industry gradually subsided: in 2021, due to (1) the repeated epidemic situation, the catering channels continued to be blocked, (2) the consumption intention of family channels was weak and faced with high base pressure, (3) the social inventory of condiment industry was high and the willingness to take goods from distribution channels was low, (4) at the initial stage of the development of new channels such as community group purchase, due to a large amount of capital inflow and non-standard management and other factors, It has a great impact on the terminal price system of condiments. The above and other factors have led to the continuous downturn of the overall development performance of the condiment sector this year. However, the performance of the overall condiment sector in the single quarter of 2021q3 has improved, including (1) the overall channel inventory of the industry has gradually improved, (2) the negative impact of community group buying has been significantly weakened due to increasingly strict supervision, (3) the expectation of price increase at the end of the year may further stimulate the willingness of the terminal to take goods and speed up the digestion of the problem of large inventory of the industry, It may play a certain role in promoting the market demand from 2021q4 to 2022. (4) in October, the retail consumption level of social retail and grain, oil and food has improved month on month, and the impact margin of the epidemic has gradually weakened. It is expected that the terminal consumption demand of the condiment industry will further recover. Therefore, we expect that after the above short-term negative effects gradually subside, the industry is expected to usher in higher performance rebound opportunities under the low base in the future.
The company's operating performance may usher in an inflection point: in the first three quarters of 2021, the company achieved revenue of 17.99 billion yuan, a year-on-year increase of + 5.3%, Q3 achieved revenue of 5.66 billion yuan in a single quarter, a year-on-year increase of 3.1%, of which the revenue of soy sauce / sauce / oyster sauce was 3.17 / 5.3 / 1.06 billion yuan respectively, a year-on-year increase of + 2.2% / - 5.8% / + 5.1%, and the growth rate of all categories improved month on month. As the current weak consumption in China is gradually recovering and various adverse factors in the above industries are gradually disappearing, we expect that the company will also usher in an inflection point in operating performance. It is expected that the company is expected to realize revenue of 24.65/288.0/33.36 billion yuan from 2021 to 2023 respectively.
Profitability remains the industry leader, and the transmission of price increase is expected to lead to profit improvement: during the period, due to the sharp rise in the cost of bulk raw materials, the cost pressure of the industry generally increased, resulting in the sharp contraction of the gross profit margin of the overall condiment industry. Although most condiment companies took the initiative to alleviate the profit pressure by reducing the investment of operating expenses during the period, the parent net profit of most condiment companies still declined to varying degrees in the first three quarters of 2021. Among them, Foshan Haitian Flavouring And Food Company Ltd(603288) achieved a net profit of about 4.71 billion, leading the industry with a positive growth rate of 3% year-on-year, and its profitability remained stable. In the short term, the continuous rising trend of raw material prices may still cause great pressure on the cost side of the company. However, in view of the company's formal price increase plan, we expect that the market price increase from January to March next year is expected to be implemented, which will improve the overall profit margin of the company in the next year, Therefore, it is estimated that the company is expected to realize a net profit attributable to the parent company of RMB 6.68/82.0/9.63 billion from 2021 to 2023.
Target price 128.07 yuan, buy rating: To sum up, in the short term in the future, we suggest paying attention to the opportunity of substantial improvement in performance and profit after the smooth implementation of the company's price increase policy, as well as the opportunity of the recovery of the catering industry after the gradual normalization of the epidemic to drive the recovery of the condiment sector. In the long run, the consumption upgrading trend and raw material costs continue to rise, which is expected to continue to raise the industry access threshold and force small and medium-sized enterprises with backward production capacity to accelerate their exit from the market. Considering that the company has a leading national market coverage, significant brand tone and rich product matrix, and its comprehensive competitive advantage in the market is particularly significant, we are optimistic about its ability to continuously improve its market share in the future. We believe that its long-term business development logic is stable. The first coverage is given a buy rating, with a target price of 128.07 yuan, which is equivalent to 56 times of the profit forecast in 2023, It is recommended to wait for the opportunity to layout it and hold it for a long time.
