Sichuan Teway Food Group Co.Ltd(603317) (603317)
We believe that the compound condiment industry is a sunrise industry with broad development space, Sichuan Teway Food Group Co.Ltd(603317) is the leader in the industry, constantly innovating on the product side and improving the quality; On the channel side, the number of dealers is booming; On the brand side, open long-term brand publicity investment to create a new brand image. The company moves from Sichuan to the whole country, constantly develops new markets, obtains volume growth space, and provides an inexhaustible driving force for the long-term growth of the company.
Core view
The improvement of sales volume drives the growth of performance, and the prospect of popular tracks is broad. At present, the company's performance is mainly driven by sales volume. After the nationwide channel is launched, the growth space of sales volume will be further released. The cost side is driven by raw materials such as pepper and oil. The pace of price increase slightly lags behind the cost rise, and the gross profit margin fluctuates upward; The growth rate of the compound condiment track far exceeds the overall level of the condiment industry. The market scale is nearly 150 billion yuan in 2020. It is expected to maintain a compound growth rate of 10-15% in the next five years. Among them, the growth rate of hot pot seasoning and Chinese polyphony is expected to be higher than the overall growth rate of the Polyphony market, and the market increment has broad prospects.
Products, channels and brands are launched at the same time to enhance their growth ability. The number of R & D teams and R & D funds have increased for three consecutive years, pushing the innovation rate to a record. According to the data of e-commerce platform, the retention rate of new products launched in 2016-2019 reached 58.5%. Monitor the whole industrial chain of raw materials, continuously improve the production automation level and strengthen the quality control ability. Channel expansion has been accelerated and nationwide expansion has been started. Late developing markets such as East China and North China are catching up. The number of dealers has exceeded 3000 and experienced rapid growth. The incentive and assessment mechanism has been changed to improve the efficiency of the sales team. Through the "four frontlines" strategy, quickly establish the brand image, regard the brand investment as strategic investment, and the advertising expenses will continue to grow to make up for the shortcomings of the brand end. It is expected that if the channel expansion of the company is successful and the sales expenses are properly controlled in the next two years, the performance will return to rapid growth.
Sichuan seasoning is the opportunity. Compared with Yihai international, another giant in the industry, Tianwei's Sichuan seasoning revenue is significantly higher than Yihai international. At the same time, Yihai International launched a multi brand strategy, independent of Haidilao brand, and established a new brand "chopsticks hand kitchen" for Chinese compound condiments. When the products and brands of Yihai International Chinese compound condiments are not mature, Tianwei should seize the opportunity to expand its advantages in Sichuan seasonings and stabilize the competitive pattern with Yihai international.
Financial forecast and investment suggestions
We predict that the company's EPS in 21-23 years will be 0.28/0.48/0.59 yuan respectively; Using the comparable company valuation method, the company was given a 22-year price earnings ratio of 56 times, corresponding to the 22-year target price of 26.88 yuan, and was given a "overweight" rating for the first time.
Risk statement
Food safety issues; New product R & D risk; Industry competition intensifies; Risk of improper management of dealers; Raw material price fluctuation
