\u3000\u3 China Vanke Co.Ltd(000002) 507 Chongqing Fuling Zhacai Group Co.Ltd(002507) )
Event: the company disclosed the annual report of 2021. In 2021, the revenue / net profit attributable to the parent company / net profit deducted from non attributable to the parent company was RMB 2.519742/694 billion, with a year-on-year increase of + 10.82% / – 4.52% / – 8.49%. Among them, 21q4 achieved revenue / net profit attributable to parent company / deduction of net profit not attributable to parent company of RMB 563 / 238 / 209 million, a year-on-year increase of + 18.74% / + 45.75% / + 32.41%. It is basically consistent with the previous performance forecast. At the same time, the company announced the financial budget for 2022, with a revenue target of 2.896 billion yuan.
Mustard grew steadily, contributed greatly to price increase, and regional development progressed smoothly. In terms of products, the revenue of mustard / pickle / radish in 2021 was + 12.7% / + 3.4% / – 30.8% year-on-year. The decline of radish revenue was mainly due to the adjustment of sales policy during the year, the amount of mustard decreased by 0.6%, and the contribution of price increase exceeded 13%. The company raised the ex factory price of some products by 3% – 19% in November last year, which reflected that the price increase of the company was implemented smoothly. In terms of subregions, the income of the base camp in South China increased by 15.15% year-on-year, and that of central / Northeast / East China increased by 13.16% / 13.80% and 23.19%. The number of dealers increased by 382 in the whole year, including 105 / 75 / 68 in Zhongyuan / Central China / East China respectively, driving the sinking of the company’s national channels. According to the annual report, the company has achieved the coverage of more than 30 provincial cities, sub provincial markets, nearly 300 prefecture level cities and more than 1000 county-level markets, so as to enhance the control and service of channels and promote dynamic sales while sinking channels.
The rise in costs led to pressure on the annual gross profit, and the price increase + contraction of expenses promoted the recovery of net interest rate. In 2021, the gross profit margin was 52.36%, with a year-on-year increase of -5.91 PCT, mainly due to the influence of market supply and demand on the raw materials green vegetable head and semi-finished mustard, the annual price was + 80% / 42% year-on-year, making the operating cost + 13% year-on-year (the gross profit margin was 55.97%, with a year-on-year increase of -2.29 PCT after reducing the freight of 90.97 million yuan to the sales cost). The sales expense rate was 18.86%, year-on-year + 2.67 PCT, and the sales expense rate after restoration was 22.47%, year-on-year + 6.28 PCT, mainly due to the company’s investment of 240 million brand publicity expenses. The management / financial expense ratio was + 0.42pct / – 2.28pct year-on-year, resulting in a net interest rate of 29.46% and -4.73pct year-on-year. The gross profit margin of 21q4 was 36.08%, year-on-year -23.63 PCT (the gross profit margin after reduction was 52.23%, year-on-year -7.48 PCT), and the net profit margin was 42.30%, year-on-year + 7.84 PCT, mainly due to: 1) the deposit interest income of 42.81 million yuan brought higher non recurring profits and losses, and the net profit margin after deduction of non recurring interest in 21q4 was 37.05%, year-on-year + 3.82 PCT. 2) After the price increase, the profit margin of the company was opened, and the report dividends were gradually implemented, realizing the rapid improvement of profit margin. 3) Q4 advertising expenses decreased month on month compared with the first three quarters.
Diversified development of categories, continuous sinking of channels, and expected growth in 2022. In 2022, the focus of the company will shift from the main business of pickled mustard to diversified and multi category development. The product end will focus on new products such as radish and pickle. Given that the company has the advantages of channel and brand as a leader in the pickle industry, we expect that the new products are expected to open up market space and achieve rapid growth in 2022. With the continuous promotion of price increase and the continuous expansion of categories, the revenue side is expected to rise both in volume and price. In addition, the high-cost qingcaitou has been gradually digested. This year, the purchase price of qingcaitou has dropped to about 800 yuan / ton, the cost pressure has slowed down, the marginal reduction of the sales expense rate has been superimposed, and the elasticity of the profit side can be expected.
Investment suggestion: the company’s earnings per share from 2022 to 2024 are expected to be 1.12/1.33/1.54 yuan respectively. It is given a Buy-A investment rating and a six-month target price of 39.07 yuan, which is equivalent to the dynamic P / E ratio of 35x in 2022.
Risk warning: the channel sinks and the development progress of new channels is less than expected; Category expansion was less than expected