After a lapse of five years, condiments ushered in a price increase cycle. This round of price rise is universal and extensive, more rapid and resolute. Several rounds of price increases before the resumption of trading were affected by multiple factors such as rising costs and inventory cycle. After the price increase, the sales volume of the leading enterprises will be less affected. In this process, the brand strength can be gradually improved, followed by other enterprises to obtain share growth and thickened profits, and the concentration can be further improved.
Key points supporting rating
The seasoning boom resumed, and the price increase promoted the vigorous development of the industry. Condiments have defensive properties and start the price increase cycle in 2-3 years. (1) The price increase of condiment industry is affected by multiple factors such as rising cost and inventory cycle. Under the condition of moderate inventory, the profit is expected to increase in 1-2 quarters after the price increase. (2) After the price increase, the sales volume of the leading enterprises will be less affected. In this process, the brand strength can be gradually improved, followed by other enterprises to obtain share growth and thickened profits, and the concentration can be further improved. (3) The leading brands have strong bargaining power, and the sales volume is least affected when the price is raised. After the price is raised, the sales volume growth is accelerated.
The profitability of enterprises resumed trading, and the price increase led to the increase of net interest rate. (1) From the perspective of the revenue volume and price of Haitian and Zhongju, the sales volume is growing, and the price is driven by the price increase. At the same time, the price increase has little negative impact on the leading sales volume. (2) From the perspective of business model, Haitian barrier comes from the leading cost advantage, the scale effect brings very low manufacturing costs, and the production capacity brings first mover advantage with channel expansion. (3) From the perspective of improving profitability, Haitian and Zhongju have increased their net interest rate by reducing expenses under the background of increasing costs 20 years later. (4) The price increase can lead to an increase in net interest rate 1-3pct.
The price increase was delayed for half a year to be transmitted to enterprises, and the concentration will increase in the future. (1) This round of price increase is mainly affected by rising costs, which is universal, extensive, more rapid and resolute. (2) This round of price increase is still under pressure, mainly from the uncertainty of demand. The impact of inventory and community group purchase is gradually digested. Haitian has rich experience in dealing with high inventory and transformation of channels. We judge that after two quarters of adjustment, the company will gradually return to steady state. (3) According to the calculation, the comprehensive cost of Haitian 4q changes by 15%, which is basically consistent with that of 3q, and is expected to affect the gross profit margin -3pct. The price increase is 3% – 7%. Assuming that the corresponding average price increases by 5%, the coverage cost is expected to rise. (4) The price increase and community group purchase both promote the elimination of brands with weak competitiveness, improve the concentration of benefits in the future, and the price increase of the leading Haitian has a weak negative impact on sales and strong performance stability.
Key recommendation
Focus on the leader Foshan Haitian Flavouring And Food Company Ltd(603288) , and pay attention to Jiangsu Hengshun Vinegar-Industry Co.Ltd(600305) , Jonjee Hi-Tech Industrial And Commercial Holding Co.Ltd(600872) . The adjustment of community group purchase has been gradually improved. We judge that high inventory needs to be digested in 1-2 quarters. The main theme of the first half of 22 years is inventory clearing + investment expenses, pay due attention to the changes of terminal demand, and will usher in a profit release period from the second half of the year Foshan Haitian Flavouring And Food Company Ltd(603288) , Jiangsu Hengshun Vinegar-Industry Co.Ltd(600305) , Jonjee Hi-Tech Industrial And Commercial Holding Co.Ltd(600872) 22 year PE is in the range of 35x-50x, which is below the five-year valuation center of the industry. When the performance is verified, the industry is expected to enter a new round of rising cycle.
Main risks of rating
Macroeconomic downside risk; The risk of intensified industry competition; Risk of large fluctuation of raw materials; The cost model and related calculation have limitations; The epidemic has repeatedly affected the recovery of consumption.
