Xiangpiaopiao Food Co.Ltd(603711) (603711)
event
On January 4, 2022, in view of the continuous rise in the costs of main raw materials, labor, transportation and energy, in order to better provide high-quality products and services to dealers and consumers and promote the sustainable development of the market and industry, the company decided to adjust the product price of the company’s solid brewing milk tea (including classic series and good material series), The price increase range of main products is 2% – 8%, and the new price will be implemented according to the price adjustment notice of each product from February 1, 2022.
Key investment points
The repeated epidemic has weakened the demand, and the seasonal fluctuation is still obvious
In 2021q1-q3, the company’s revenue was 1.974 billion yuan, an increase of 4.3% at the same time; The net profit attributable to the parent company was 39 million yuan, a decrease of 11.5%. Of which, the revenue of 2021q3 was 886 million yuan, a decrease of 1.8%; The net profit attributable to the parent company was 102 million yuan, a decrease of 6.2% at the same time, which was due to the weakening of demand caused by repeated epidemic situations. The growth rate of the company’s revenue in the first three quarters was 61%, – 29%, – 1.8% respectively, and the growth rate of net profit attributable to the parent was 103%, – 401% and 6.2% respectively. The seasonal fluctuation is still obvious. In 2021q1-q3, the company’s main business income was 1.943 billion yuan, an increase of 3.9% at the same time; Among them, the brewing revenue was 1.412 billion yuan, an increase of 9% at the same time, and the brewing revenue grew steadily; The revenue of instant drinks was 531 million yuan, a decrease of 7.6%. The epidemic situation is repeated, and the consumption scene of ready to drink sector has been greatly affected.
Price increases resist costs and are expected to increase profits in 2022
Due to the rise of raw materials, the company raised the price of brewing milk tea (including classic series and good material series) by 2% – 8%. The new price will be implemented according to the price adjustment notice of each product from February 1, 2022. The price increase will stimulate dealers to prepare goods after the Spring Festival. We expect that the company will still have corresponding expenses to spend the price increase stage in the peak brewing season. It is expected that the price increase will increase the profit in 2022 and cover part of the product cost accordingly.
Actively explore new products, ready to drink and increase waiting time for inspection
The company established two joint ventures with Xiamen Kingdomway Group Company(002626) at the end of October 2021 to actively explore functional products. At present, the sample health milkshake has been produced, mainly for fitness and shaping people. It is expected to be listed in the first half of 2022.
At present, the company is actively exploring new products. In addition to the above functional products, the company also expands new consumption scenarios. Fruit juice tea and lanfangyuan will be bottled and further expanded from static consumption scenarios to dynamic consumption scenarios. The company actively seeks innovation and change, and the ready to drink sector continues to produce new products to find a road suitable for itself. The high growth of ready to drink takes time
Profit forecast
We continue to be optimistic about the continuous innovation of the company’s products and the ready to drink sector, which is expected to become the second growth curve of the company and continuously cultivate the market. It is estimated that the EPS from 2021 to 2023 will be 0.93/1.06/1.18 yuan, and the current share price corresponding to PE will be 18 / 16 / 14 times respectively. It is covered for the first time and given a “recommended” investment rating.
Risk statement
Macroeconomic downside risk, epidemic drag on consumption, model promotion is less than expected, new product promotion is less than expected, ready to drink growth is less than expected, etc.
