Zhengzhou Qianweiyangchu Food Co.Ltd(001215) (001215)
Event: the company announced that it would reduce the product promotion policy of some quick-frozen rice flour products or increase the distribution price, with the price adjustment range of 2% – 10%, and the new price will be implemented from December 25.
The price increase announcement of small b-end will be implemented at the end of the year. The price increase is mainly aimed at small B dealer channels. According to the company’s channel revenue structure, we expect the overall revenue to account for 30-40%, with an average price increase of about 5%. Considering the rising cost of oil and flour at the end of raw materials, the company raised the price of standard products in distribution channels such as sesame balls, fried dough sticks and steamed dumplings. For large and medium-sized B customers, the price has not been raised yet. Such customer contracts are usually signed once a year or half a year. Therefore, it is expected that when a new contract is signed next year, the company will negotiate the new price with the customer. Historically, the products provided by the company account for a small proportion of the cost and income of Yum China. Yum usually ensures the company’s relatively stable gross profit margin. Therefore, the cooperation with Yum China is expected to maintain a relatively stable and reasonable gross profit margin.
The price rise of the quick freezing industry is expected to be carried out smoothly. Under the background of price increase of bulk raw materials + power and production restriction this year, quick freezing companies are facing great cost pressure. Since November, Anji, Haixin Sanquan and other quick-frozen companies have successively issued price increase announcements, raising the price of most products (except quick-frozen meat products) within the range of 2-10%. At the same time, according to the industry news and channel feedback, most enterprises in the industry successively sent price increase letters from November to December, and the price increase trend of the industry has been established. Therefore, we believe that the price increases of the industry and the company can be transmitted smoothly and maintain a stable profit level.
Catering big B has strong stickiness. Qianwei has formed the advantage of first mover customers, and the production capacity will be gradually released next year to ensure growth. It is expected that Wuhu, Anhui Province will release 30000 tons of production capacity at the beginning of next year and 70000-80000 tons of Henan Xinxiang phase III project will be released by the end of next year. In the future, the production capacity may be further distributed in Southwest China. Catering big B has strong stickiness. In the long run, Qianwei can rely on the advantages of first mover customers, superimpose strong R & D strength and service ability, develop new customers and maintain growth.
Profit forecast and investment suggestions: the company focuses on serving b-end catering customers and is optimistic about the company’s continuous growth driven by strong R & D and customer advantages. Maintaining the previous profit forecast, it is estimated that the company’s revenue from 2021 to 2023 will be RMB 1.31/16.7/2.07 billion respectively, with a year-on-year increase of + 38.5% / 27.6% / 23.9%, and the expected profit attributable to the parent company is RMB 88 / 0.96/135 million, Year on year + 15.5% / 8.4% / 40.8% (RMB 0.9/115/145 million after excluding incentive expenses, consistent with the previous time), EPS were RMB 1.04/1.13/1.59 respectively (RMB 1.06/1.35/1.71 after excluding incentive expenses, consistent with the previous time), and the corresponding PE were 63x, 58x and 41x respectively, maintaining the “buy” rating.
Risk tips: intensified industry competition, risk of food safety events and price fluctuation of raw materials.
