Foshan Haitian Flavouring And Food Company Ltd(603288) (603288)
Main points:
The rapid change of condiment retail channel structure and the iterative upgrading of catering demand are essentially the change of consumers’ lifestyle. Only “change” is the truth. Relying on the forward-looking and agile organization ability, Haitian has successfully built a super soy sauce product, built a core seasoning product matrix, and ran in the field of polyphony through rapid trial and error; In terms of channels, carry out digital transformation, actively embrace o2o mode and establish Omni channel coverage capacity; In terms of brand, starting from the ultimate cost-effective positioning, the group broke the circle through high-end and diversification, and continued to penetrate the minds of young people. The impact of the epidemic on performance has gradually faded, the demand has warmed up and the cost pressure has eased, and the company’s performance growth is expected to recover to 15%. It is predicted that PE will be 60 times next year and will be given a buy rating.
Condiment industry has broad space, challenges and opportunities coexist
Condiments have sticky taste and rigid expenditure, and consumer demand is becoming increasingly rich and diverse. Under the background of rising volume and price, the industry will maintain steady growth. The three major channels of catering, retail and food industry cross penetrate. New business formats such as live delivery and community group purchase impact the traditional distribution mode, Wuxi Online Offline Communication Information Technology Co.Ltd(300959) traffic accelerates the integration, and the changing situation of the industry provides an opportunity to open up a new situation. By category, soy sauce raises big fish in large water, and the head enterprises expand rapidly. In the stock competition pattern, brand renewal and product upgrading have become the trend. Under the trend of convenience and compounding of condiments, oyster sauce and seasoning sauce accelerate the horizontal extension iteration, while vinegar is vertically subdivided into cooking, catering, health care, beverage and other functions. With the improvement of quality and the increase of consumption frequency, the market is expected to expand rapidly.
Grasp the new trend of the industry, raise prices and boost the return of growth
(1) Adhering to the user’s thinking, starting from the end, carry out R & D innovation and intelligent manufacturing investment, build core products from soy sauce to oyster sauce, seasoning sauce and other composite condiments, increase the business of vinegar and cooking wine, test the new polyphony of water, and promote national penetration. (2) Pay attention to content marketing, popular variety titles occupy the minds of users, develop the consumption potential of young customers, and tap private domain traffic to drive the increase of repurchase. (3) catering industrialization has given birth to a new outlet for customized condiments. The company has flavor R & D accumulation and channel advantages, and is expected to promote the LTV of users simultaneously in the future. (4) The price increase will release the aggressive market signal and help activate the vitality of the channel. Next year, the bottom of the demand rate will probably rise, the inventory of 1q22 channel is expected to peak, the circulation will return to benign, and the company will get out of the growth quagmire.
Investment advice
First coverage, give buy rating. We estimate that the company’s revenue from 2021 to 2023 will be 24.33 billion yuan, 28.01 billion yuan and 32.04 billion yuan, with a year-on-year increase of 7% / 15% / 14%, the net profit attributable to the parent company will be 6.533 billion yuan, 7.769 billion yuan and 8.881 billion yuan, with a year-on-year increase of 2% / 19% / 14%, EPS will be 1.55/1.84/2.11 respectively, and the corresponding PE will be 71.26/59.92/52.42 respectively. This year’s upward cost accelerated the industry reshuffle, the leader took the lead in benefiting, and the recovery of profitability also contributed to the rise of valuation, giving a “buy” rating.
Risk statement
The risk of sharp rise in raw material prices, food safety risk, lower than expected risk of new product promotion and new channel expansion, the risk of repeated epidemic, and the risk of decline in industry prosperity.
