\u3000\u3 Shengda Resources Co.Ltd(000603) 866 Toly Bread Co.Ltd(603866) )
Event: on March 16, the company released its annual report for 2021, with annual revenue of 6.336 billion yuan, a year-on-year increase of + 6.24%; The net profit attributable to the parent company was 763 million yuan, a year-on-year increase of – 13.54%. The basic EPS is 0.80 yuan. Q4 achieved a revenue of 1.672 billion yuan, a year-on-year increase of + 5.08%; The net profit attributable to the parent company was 195 million yuan, a year-on-year increase of -0.95%.
In the past 21 years, the revenue increased slightly and the profit decreased year-on-year. The company’s revenue in 2021 and 21q4 increased at a low speed, because the epidemic led to a decline in demand for transportation hubs, school consumption and other scenes; The year-on-year double-digit decline in the profits of the whole year and 21q4 was due to the obvious year-on-year decline in the gross profit margin, which dragged down the profit performance.
In terms of regions, North China / Northeast China / East China / Central China / Southwest / Northwest / South China achieved revenue of 1.453/28.80/14.67/1.85/7.96/4.19/509 billion yuan respectively in 21 years, with a year-on-year increase of + 2.34% / + 2.82% / + 16.85% / + 48.38% / + 6.70% / – 0.11% / + 15.48% respectively. The revenue of mature markets such as northeast China and North China was flat year-on-year. The company accelerated the sinking of sales network, explored market segments, deeply tapped channel potential, and consolidated and expanded the existing market share. The revenue of new markets such as East China, central China and South China grew rapidly. The company increased investment in key customers and improved the quality of single stores. In the next 22 years, the company will continue to focus on the markets in East and South China, actively expand the markets in southwest and Xinjiang, and further improve the national market layout.
The year-on-year decline in gross profit margin is the main reason for dragging down profits. The gross profit margin of the company in 21 years was 26.28%, year-on-year -3.69ppt (21q4 was 26.41%, year-on-year + 31.47ppt). The main reasons for the decline of gross profit margin are (1) the withdrawal of phased social security relief policy; (2) Rising prices of raw materials; (3) Promotional activities picked up year-on-year. The company’s sales expense rate in 21 years was 8.71%, with a year-on-year increase of -0.08ppt (21q4 was 8.48%, with a year-on-year increase of + 32.22ppt), which was due to the year-on-year increase in labor costs and store expenses after the withdrawal of the phased social security exemption policy, but the growth rate was slightly lower than that at the income end. The management fee rate was 1.76%, with a year-on-year increase of + 0.07ppt (21q4 was 1.91%, with a year-on-year increase of -0.18ppt), which was due to the year-on-year increase in consulting fees. The R & D expense rate was 0.33%, with a year-on-year increase of + 0.14ppt (21q4 was 0.39%, with a year-on-year increase of + 0.14ppt), which was due to the increase of human costs and the increase of R & D expenditure caused by the preparation and transformation of R & D workshops. The financial expense ratio was -0.17%, with a year-on-year increase of -0.54ppt (21q4 was -0.41%, with a year-on-year increase of -0.26ppt), which was due to the high interest expense base caused by the issuance of convertible bonds in 20 years.
The capacity utilization rate is still high, and the construction of new factories is advancing steadily. In the 21st year, the overall capacity utilization rate of the company was 85.56%. The capacity utilization rate of factories in central / South China is low, 50.83% / 75.40%, which is mainly due to the short production time of Wuhan Taoli and Hainan Taoli and the relatively low capacity utilization rate in the transition period. At present, new factories in Shenyang, Zhejiang, Qingdao, Quanzhou, Guangxi and Changchun are under construction, and it is expected that the production capacity will be released smoothly in the future.
Investment suggestion: it is estimated that the company will achieve a revenue of 7.112/80.52/9.036 billion yuan and a net profit attributable to the parent company of 8.53/9.62/1.077 billion yuan in 22-24 years, which is equivalent to 0.90/1.01/1.13 yuan of EPS respectively. At present, the stock price corresponds to 23 / 21 / 18 times of PE in 22-24 years. The current valuation of the company is equivalent to the overall valuation level of 21 times in the leisure food sector in 22 years. The company is a leading company in the bread baking industry, with a stable market position, continuous release of production capacity and good medium and long-term growth. To sum up, maintain the “recommended” rating.
Risk tip: the business expansion speed is lower than expected, the consumption tendency of residents decreases, food safety problems, etc.
