\u3000\u3 Shengda Resources Co.Ltd(000603) 187 Qingdao Hiron Commercial Cold Chain Co.Ltd(603187) )
Leader of commercial refrigerator industry: China’s commercial refrigerator market has good growth and high barriers to entry. In recent years, industry catalysts are also increasing, and it is expected to accelerate development in the future Qingdao Hiron Commercial Cold Chain Co.Ltd(603187) is a leading company in this field. Its growth logic is gradually realized and its share is increased. It is expected to become a global leading enterprise, and its investment value is underestimated by the capital market.
The demand for low-temperature food has increased, and the freezer has become a competitive weapon: we have observed that consumers’ demand for low-temperature food and cold drinks (such as pasteurized milk, quick-frozen food, etc.) has increased in recent years, which will boost the sales of commercial freezers. According to industry online, the sales growth of food display cabinets and beverage cabinets in China in 2021 was 17% / 19% respectively. We believe that for food and beverage enterprises, in addition to the basic functions of freezing, refrigeration and storage, the freezer also plays a role in displaying the brand and seizing a favorable position. In order to explore the use of terminal freezers, we investigated convenience stores and mom and pop stores in some cities in 2020q4 and 2021q4, and found that: 1) convenience stores use more freezers than Mom and pop stores, and the types of freezers are more diverse; 2) Compared with 2020q4, in 2021q4 convenience stores in Tianjin, Shanghai and Shenzhen, the average total use of freezers and refrigerated cabinets with doors in a single store increased. We judge that under the catalysis of the policy, with the upgrading and increase in the number of convenience chain stores, the use of freezers is expected to rise, which will also promote the upgrading of mom and pop stores and increase the use of freezers.
Yuanqi forest catalyzes the development of freezer industry: Yuanqi forest is an emerging brand focusing on “health drinks”. The company seizes a favorable sales position, displays the brand and collects consumption data by laying a large number of its own brand freezers (cameras are embedded in the cabinet door). The cabinet of Yuanqi forest has complex manufacturing process and intelligent function, which puts forward high requirements for production, which is conducive to the leading enterprises of freezers. The rapid rise of Yuanqi forest with freezers as “weapons” has played an exemplary role for its peers. According to industry research, some traditional food and beverage enterprises plan to upgrade their own freezers, with higher unit price and larger volume; According to industry online, the sales volume of China’s beverage cabinet industry increased by 19% in 2021, and the industry accelerated its growth.
Hairong’s white horse logic: in the field of commercial freezers, Hairong has obvious advantages: 1) in terms of management, compared with its competitors, Hairong has a more perfect incentive system, the core management team and key technicians are stable, and grasp the demand trend accurately. 2) In terms of production, the company has the advantages of customization, intelligence and scale. 3) In terms of customer resources, the downstream customers of Hairong are leading enterprises in the food and beverage industry (Mengniu, Yili, etc.). These leading companies have strict screening standards for suppliers. After Hairong breaks through these large customers, orders will increase in large quantities and customer stickiness will be relatively high. Hairong’s customer reputation accumulated over the years will also help the company develop new customers. Taking the refrigerated cabinet that Hairong has focused on in recent years as an example, the compound growth rate of revenue from 2015 to 2020 was 32%.
Investment suggestion: we believe that the market underestimates the space of the commercial refrigeration display cabinet industry and the competitive barriers of high-end customers, and has insufficient expectations for the growth potential and performance elasticity of the company. The specialization advantage of Hairong is evolving into scale advantage, and the growth logic will be realized gradually. We expect EPS to be 0.88/1.48 yuan from 2021 to 2022, with a six-month target price of 37.00 yuan, corresponding to 25 times PE in 2022, maintaining the investment rating of buy-a.
Risk tip: the competition pattern worsens, the price of raw materials rises, and the penetration of refrigeration display cabinets in the industry is less than expected.
