\u3000\u3 Shengda Resources Co.Ltd(000603) 866 Toly Bread Co.Ltd(603866) )
Key investment points
Event: the company released its 2021 annual report. The annual revenue was 6.34 billion yuan, a year-on-year increase of 6.2%, and the net profit attributable to the parent company was 760 million yuan, a year-on-year decrease of 13.5%; In 2021q4, the revenue in a single quarter was 1.67 billion yuan, a year-on-year increase of 5.1%, and the net profit attributable to the parent company was 190 million yuan, a year-on-year decrease of 0.9%. In addition, the company plans to distribute a cash dividend of 6 yuan (including tax) for every 10 shares to all shareholders and increase 4 shares for every 10 shares by converting capital reserve into share capital.
The main products grew steadily, and the national layout was further improved. 1. By category, bread and pastries, moon cakes and zongzi achieved operating revenue of 6.19 billion yuan (+ 6%), 130 million yuan (+ 13.5%) and 12.48 million yuan (+ 61.9%) respectively. The mellow series of star products grew steadily, and new rock baked cakes, cheese bread, pastry bread, cranberry slices and other products increased rapidly, and the competitiveness of products continued to improve; New bread products are gradually put on the market to further meet the needs of consumers. 2. In terms of subregions, North China, Northeast China, East China, central China, Southwest China, Northwest China and South China achieved operating revenue of 1.45 billion yuan (+ 2.3%), 2.88 billion yuan (+ 2.8%), 1.47 billion yuan (+ 16.9%), 190 million yuan (+ 48.4%), 800 million yuan (+ 6.7%), 420 million yuan (- 0.1%) and 510 million yuan (+ 15.5%) respectively. In new markets such as East China and South China, the investment in key customers continues to increase and the quality of single stores continues to be improved; Northeast, North China and other mature markets accelerated the refinement and sinking of channel network; The company will further expand the southwest market and Xinjiang market and further improve the national layout. With the improvement of the epidemic situation nationwide, bread consumption has gradually recovered since 2021; Sporadic outbreaks have been repeated, and the demand in some areas is under pressure. In terms of dealer development, by the end of 2021, the company had 895 dealers, with a net increase of 115.
Operating costs increased and profitability was under pressure. 1. The overall gross profit margin was 26.3%, down 3.7pp year-on-year, mainly due to: 1) affected by the national phased social security relief policy in 2020, the cost base was low, and it returned to normal in 2021; 2) Increase in promotional activities, return rate and discount rate; 3) The cost of some raw materials rose. 2. In terms of expense rate, the sales expense rate, management expense rate and R & D expense rate were 8.7%, 1.8% and 0.3% respectively, which remained basically stable; The financial expense ratio was – 0.2%, a year-on-year decrease of 0.5pp, mainly due to the high interest expense base caused by the issuance of convertible bonds in the same period in 2020. The overall net interest rate was 12%, down 2.8pp year-on-year.
Nationwide construction of production bases and steady progress in capacity expansion. 1. In terms of market, the company has established production bases in 20 regions across the country and radiated sales to the surrounding areas; Continue to increase investment in mature markets in North China and Northeast China, further tap market potential, consolidate and improve market share. 2. In terms of production capacity, gradually promote the expansion of production capacity. The production bases in Shenyang, Zhejiang, Qingdao, Quanzhou, Guangxi and Changchun are under construction, and it is expected to gradually release 292000 tons of new production capacity. Expanding production capacity will better meet the downstream demand, form the scale effect of production and sales in the mode of “central factory + wholesale” and improve profitability.
Profit forecast and investment suggestions. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be 850 million yuan, 940 million yuan and 1.04 billion yuan respectively, and the EPS will be 0.89 yuan, 0.99 yuan and 1.09 yuan respectively. The corresponding dynamic PE will be 23 times, 21 times and 19 times respectively, maintaining the “hold” rating.
Risk warning: the price of raw materials may fluctuate sharply; Risk of market development failing to meet expectations.
