\u3000\u3 Bohai Water Industry Co.Ltd(000605) 499 Eastroc Beverage (Group) Co.Ltd(605499) )
Event: the company released its 2021 annual report. In 2021, the company realized a revenue of 6.978 billion yuan (+ 40.7%), a net profit attributable to the parent company of 1.193 billion yuan (+ 46.9%), and a net profit not attributable to the parent company of 1.084 billion yuan (+ 34.7%). In 2021q4, the operating revenue is 1.418 billion yuan (+ 54.9%), the net profit attributable to the parent company is 197 million yuan (+ 82.3%), and the net profit not attributable to the parent company is 119 million yuan (+ 13.1%). The basic earnings per share is 3.11 yuan / share.
The year ended smoothly and the high growth trend continued. In 2021, the company realized a revenue of 6.978 billion yuan (+ 40.7%), a net profit attributable to the parent company of 1.193 billion yuan (+ 46.9%), and a net profit not attributable to the parent company of 1.084 billion yuan (+ 34.7%), of which the non recurring profit and loss was mainly the income of private equity funds of 80 million yuan. In terms of split volume and price, Eastroc Beverage (Group) Co.Ltd(605499) volume increased by 43.8%, price – 1%, other beverage volume increased by 8.2%, price increased by 13%, mainly due to the high ton price of new products such as 0 sugar and gas. In terms of cash flow, the company’s sales revenue in 2021 was RMB 8.359 billion (+ 33.4%). Net operating cash flow was 2.077 billion yuan (+ 54.9%). At the end of 2021, the contract liabilities were 1.241 billion, an increase of 291 million (+ 30.6%) over the same period last year, mainly due to 1) strong market activities and increased sales discounts and rebates. 2) The Spring Festival is ahead of schedule, and the advance payment increases.
The market in Guangdong grew steadily, and East and South China performed well. In terms of products, in 2021, 500ml gold bottles / 250ml gold bottles / 250ml gold cans / 250ml gold bricks / other beverages achieved a year-on-year growth rate of 63% / 3% / – 7% / 46% / 22% respectively, and 500ml large gold bottles performed brilliantly. In terms of regions, the revenue of all regions increased rapidly. The annual revenue growth rate of Guangdong / East China / Central China / Guangxi / Southwest / North China / online / direct sales was 30% / 79% / 44% / 40% / 65% / 45% / 88% / 43%, and the revenue proportion of Guangdong Province decreased from 50% to 46%. The East China and southwest markets performed well, mainly because the East China market entered in 2015, with long accumulation time, strong brand influence and basically completed channel construction. The entertainment and catering activities in the southwest market are developed and the market is relatively large. The company has increased the sinking of channels, the development of outlets, and the development of special channels such as school scenic spots. In terms of the number of dealers, the number of dealers outside Guangdong Province (excluding direct sales) of the company was 1715, an increase of 511 over the beginning of the year. The number of dealers in North China was adjusted, with a decrease of 83 dealers and an increase of 347 throughout the year. There were 348 direct and online dealers, an increase of 142 over the beginning of the year, and 190 dealers in Guangdong Province, an increase of 59 over the beginning of the year. In terms of terminal development, the number of terminals of the company was 2.09 million by the end of 2022, an increase of 590000 in the first half of the year and 300000 in the second half of the year.
Throughout the year, the profitability of the company was relatively stable and the gross profit rate increased slightly. The gross profit margin of the company is 44.4% (- 2.2pct), and the gross profit margin excluding freight is 47.34% (+ 0.74pct), mainly due to 1) the proportion of 500ml gold bottle revenue increased from 67% to 72%. 2) The purchase price of polyester chips, a bulk raw material, decreased due to price locking in advance, and the average price decreased by 12.03% year-on-year in 2020. The sales expense rate was 19.6% (- 1.4pct), which decreased slightly from 18.24% to 18.19% after reducing the impact of freight and listing project promotion, mainly due to the increase in the number and salary of sales personnel. The management fee rate is 3.6% (- 0.1pct), deducting the non net interest rate of 15.5% (- 0.7pct). The pressure on the cost side is large, the gross profit margin of Q4 is under pressure, and the deduction of non net profit margin decreases. The gross profit margin of 2021q4 company is 28.2% (- 17.5pct), mainly due to 1) the large increase in pet cost. 2) Changes in accounting standards for transportation expenses. In 2021q4, the sales expense rate is 12.0% (- 12.9pct), the gross sales difference is 16.2% (- 4.6pct), the management expense rate is 4.0% (- 1.9pct), and the non net profit margin is 8.4% (- 3.1pct) deducted in Q4.
The market share continues to increase, and the product matrix is gradually enriched. In the short term, relying on the 500ml gold bottle large single product, the company has a smooth market development outside the province, good investment and distribution situation and strong certainty. In 2021, the company’s sales share in the energy beverage market increased by 4.7pct to 31.7%. In terms of products, the company continues to launch new products and improve the energy + product system. “Dongpeng 0 sugar special drink” was launched in April 2021, “Dongpeng big coffee” was launched in September, and “Daneng” was launched in December. In 2022, it is planned to launch a light energy drink “Dongpeng sports special drink” and “Dongpeng bubble special drink” for sports scenes “250ml new gold pot” and “335ml slim pot”. In 2022, the oil Citrus Lemon tea was listed nationwide and the one yuan enjoyment activity was launched. In terms of channels, we expect the company to show the effect of frozen display, single point revenue growth, and the channels in East China and southwest China to continue to sink and maintain a high growth rate. In the long run, the company has a rich product matrix, leading digital layout of channels, focused enterprise resources, continuous brand investment and sales The sales team has strong combat effectiveness and has successfully created a 500ml single product, which is expected to continue to increase market share.
Profit forecast and Valuation: we expect the revenue growth rate to be 27.0%, 25.0% and 23.0% from 2022 to 2024, and the growth rate of net profit attributable to the parent company to be 25.0%, 28.8% and 25.5%, maintaining the target price of 220 yuan in the early stage and the buy rating.
Risk tip: raw material price fluctuation risk and intensified industry competition risk.
