Sichuan Teway Food Group Co.Ltd(603317) (603317)
Key investment points:
Leading enterprise of deep ploughing compound seasoning
Sichuan Teway Food Group Co.Ltd(603317) with the mission of "creating a better life with delicious food", it has been focusing on the R & D, production and sales of composite seasoning since its establishment. Now it has developed into a large-scale composite seasoning production enterprise focusing on hot pot seasoning and Chinese dish seasoning. The company has three brands of "good family", "Dahongpao" and "crown block". Its marketing network covers 31 provinces and cities in China and is exported to overseas. At the same time, the company makes full use of its own R & D advantages to provide customized food blending products to meet the needs of chain catering customers for product standardization, food safety and taste stability.
The resonance of volume and price promotes the sustained prosperity of the industry
Although the condiment industry has maintained a high growth rate in the past decade, we believe that the industry has not yet entered a mature stage. Under the dual influence of "quantity" and "price", the industry will still maintain a high degree of attraction. Although the industry has been affected by the epidemic in the short term and the recovery process of the catering industry has been repeated, in the long run, the development of the catering industry will still be the main source of large-scale terminal demand, and the rising cost is the main driver of price increase. We expect that in the next five years, the industry will benefit from the upgrading of consumption, the improvement of urbanization rate and the sustainable development of the catering industry to maintain a natural growth rate of more than 7%. In addition, with the continuous penetration of the Internet into the catering industry, the passive transformation of consumers' consumption habits, the scale of the takeout industry continues to grow, and the catering chain rate continues to improve. The change of eating habits has given birth to the high growth of the condiment sub category - compound condiments.
Continuous brand investment and obvious competitive advantage
Compared with traditional condiments, the technological process of compound condiments is relatively simple, so the product barrier is low. In 2020, due to home isolation during the epidemic, the industry scale ushered in rapid growth, making relevant enterprises expand their production scale one after another. At the same time, there are many new entrants, and the market competition pattern began to become increasingly fierce. In addition to intensified competition, the company has also been disturbed by the outbreak of short-term industry demand. In addition, since the second half of 2020, the company has increased brand investment, actively expanded brand influence and opened the strategic layout of brand rejuvenation through cooperation with first-line stars, but also caused high advertising costs. In view of the above problems, the company actively adjusts the organizational structure, digests channel inventory, promotes customized meal adjustment, adheres to brand launch and is based on long-term development.
Investment advice
We believe that the compound condiment industry is still in a period of development, coupled with the rapid increase in demand during the epidemic, which makes the industry face certain fluctuations and intensified competition. Despite the slowdown in demand this year, it is accompanied by the clearing of industry inventory and small and medium-sized enterprises, and the competition pattern of the industry has improved. Looking forward to next year, we still believe that polyphony is a high growth track, and catering consumption is expected to continue to improve in the post epidemic period. In addition, the company's continuous brand investment will benefit in the long run. In the future, with the continuous innovation of products, the company will still achieve healthy and rapid development. To sum up, we expect the company to achieve earnings per share of RMB 0.29/0.47/0.61 from 2021 to 2023, giving the company an investment rating of "overweight".
Risk statement
The macroeconomic downturn, the weakening of consumption capacity, the recurrence of epidemic situations and food safety problems.
