\u3000\u3 Shengda Resources Co.Ltd(000603) 317 Sichuan Teway Food Group Co.Ltd(603317) )
Events
On the evening of February 25, 2022, the company issued the 2022 restricted stock incentive plan (Draft): the incentive plan plans to grant 11.97 million restricted shares to 237 members of the company’s directors, senior managers, middle managers and technical backbones.
Key investment points
The equity incentive plan is implemented to stimulate the company’s business vitality
The company granted 11.97 million restricted shares to 237 directors, senior managers, middle managers and technical backbones, including director and vice president Yu Zhiyong, Wu Xuejun, Shen Songlin, vice president and board secretary he Changjun, accounting for about 1.59% of the total share capital of the company on the announcement date.
The incentive plan is unlocked twice. The performance assessment requirements are: Based on the operating income in 2021, the growth rate of operating income in 2022 is not less than 15%, the growth rate of operating income in 2023 is not less than 32.25%, and the corresponding year-on-year growth rate of operating income in 2022 / 2023 is 15% / 15%, and the assessment requirements at the individual level are set. The grant price of restricted shares granted for the first time in the incentive plan is 10.96 yuan / share, and the closing price on the day of announcement is 21.61 yuan / share, which is very attractive. We believe that the implementation of the equity incentive plan will help bind the interests of core employees, effectively boost team morale and work enthusiasm, and further stimulate the business vitality of the company.
The performance in 2021 was under pressure, and the profitability improved significantly in the fourth quarter
Previously, the company released the performance express for 2021. In 2021, the revenue was RMB 2.026 billion, a decrease of 14.34% and the net profit attributable to the parent was RMB 179 million, a decrease of 50.96%; Deduct non RMB 116 million, with a decrease of 62.43% at the same time. Among them, the revenue of 2021q4 was 628 million yuan, with a decrease of 25.22%; The net profit attributable to the parent company was 98 million yuan, an increase of 123.21% at the same time.
The overall performance in 2021 did not meet the planning at the beginning of the year, mainly due to: 1) the decline of residents’ consumption power and the sales revenue was lower than expected; 2) Rising cost of main raw materials; 3) Changes in product structure and decline in gross profit margin; 4) The industry competition intensifies and the promotion is strengthened. However, the profit in the fourth quarter improved significantly. We believe that the main reasons are: (1) the investment in advertising and promotion decreased in the fourth quarter; (2) Price increase of some products to ease the cost pressure; (3) 2020q4 has a low base.
The company actively adjusts its response and is expected to see improvement in 2022
In 2021, under the condition of weak industry, the company entered into active adjustment and Reform:
1) in terms of products, we will continue to supplement the Dahongpao product line by making efforts to promote the winter tune and other series. The price increase of some products in October will help to release the profit elasticity in 2022.
2) channels: separate Dahongpao into independent sales organizations, integrate smaller dealers, and pay more attention to the quality of investment promotion. Due to the continuous increase of sales cost investment, the current inventory level is benign.
3) organizational structure and management mechanism: in August, the retail business department was abolished, haorenjia and Dahongpao brands were established independently, and the e-commerce business department was adjusted to a new retail business department. In October, the functions of the strategic market center were further disassembled, and other functions were sunk to the level of the business division to realize the flat reform of the organizational structure. At the same time, improve the performance appraisal mechanism, improve the overall salary, and fully mobilize the enthusiasm of the company’s management team and core personnel.
4) capacity: the company will expand its capacity through IPO and fixed increase twice in 2019 and 2020 respectively. It will be put into operation successively in 2022, with a planned capacity of more than 300000 tons. The capacity will be released steadily to ensure the company’s long-term competitiveness.
Profit forecast
Looking ahead, we believe that the compound condiment industry has broad space and rapid development. It is expected to maintain double-digit growth, and some production capacity may have been cleared under the influence of the epidemic. As the leading enterprise in the compound condiment industry, the company is expected to achieve rapid growth in 2022. We expect that the EPS from 2021 to 2023 will be 0.28/0.38/0.48 yuan, and the current share price corresponding to PE will be 76, 58 and 45 times respectively. It will be covered for the first time and given a “recommended” investment rating.
Risk tips
Macroeconomic downside risks, consumption dragged down by the epidemic, intensified industrial competition, less than expected regional expansion, less than expected capacity construction or utilization, less than expected price increase, etc.
