\u3000\u3 Shengda Resources Co.Ltd(000603) 866 Toly Bread Co.Ltd(603866) )
Main points:
Event description:
The total operating income of the parent company was RMB 1.3 billion, with a year-on-year net profit of – 3.55%, up from the parent company’s annual report of RMB 1.3 billion. Among them, 4q21’s revenue was 1.672 billion yuan, a year-on-year increase of + 5.1%, and the net profit attributable to the parent company was 195 million yuan, a year-on-year increase of – 1.0%.
The price increase offset part of the rise in costs, and the gross profit margin is expected to rise after bottoming out. The unit price increase of bread and pastry contributed 2.5% of the revenue increase, but it was only one third of the 7.6% increase in unit cost. The rise in the prices of bulk commodities such as flour, sugar and gasoline in 21 years has brought challenges to cost control. Excluding the impact of 2020 and restoring according to the comparable caliber, the historical average gross profit margin of the company is about 28%. In 22 years, as the cost pressure slows down and the effect of price increase appears, the gross profit margin is expected to return to 28%.
The expenses are well controlled, and the net interest rate attributable to the parent company is higher than the historical average. During the 21 years, the expense rate of the company showed a downward trend quarter by quarter. Last year, the net profit margin attributable to the parent company was 12.05%, which was still higher than the average 1.65% in the three years from 17 to 19 despite the decline of gross profit margin. The company’s scale effect and management efficiency are at the leading level in the industry. After the national supply chain is gradually improved, there is still room for further improvement of profitability.
East China’s revenue continued to accelerate, and market cultivation achieved initial results. The quarterly revenue of 21 years increased by 0.31%, 13.87%, 5.57% and 5.09% at the same time. The growth rate slowed down in the second half of the year due to many adverse factors such as epidemic situation and production restriction. The revenue growth of 3q and 4q21 is divided by Region: the growth rate of Southwest (- 4.9%, 7.2%), Northwest (- 5.5%, 6.4%) is positive, the growth rate of North China is low (4.1%, 4.3%), the growth rate of East China continues to increase (19.3%, 25.0%), the growth rate of South China has decreased (14.5%, 9.9%), and the decline of Northeast China (4.5%, – 2.1%). Throughout the year, with the release of production capacity, East China is expected to become the main engine of the company’s scale growth, accounting for 19%), which has surpassed North China.
The profitability of mature regions is relatively stable, and there is great room for improvement in East and South China. Comparing the simulated net profit rate obtained by adding the net profit of subsidiaries in each region in 20 and 21 years, the northeast base camp (16.50%, 16.18%) is still in the first echelon, followed by the Southwest (20.08%, 15.11%), the Northwest (15.77%, 14.38%) and North China (13.35%, 10.00%). East China, which is in the development stage, is in a state of low profit (3.35% and 2.76%), while South China, which is still in the early stage of layout, has expanded its loss range (- 8.34% and – 9.95%).
Investment advice
Upgrade to “buy” rating. Considering the continuous disturbance of the epidemic and the rhythm of the company’s production capacity, we conservatively predict that the revenue from 2022 to 2024 will be 7.199, 8.028 and 8.953 billion yuan, with a year-on-year increase of 14% / 12% / 12%, the net profit attributable to the parent company will be 948, 1.131 and 1.285 billion yuan, with a year-on-year increase of 24% / 19% / 14%, EPS will be 1.00, 1.19 and 1.35 respectively, and the corresponding PE will be 20.85, 17.47 and 15.37 respectively. At present, it has a sufficient margin of safety and is given a “buy” rating.
Risk tips
The risk of sharp rise in the price of raw materials, food safety risk and the risk that the construction of production capacity is less than expected.
