\u3000\u3 China Vanke Co.Ltd(000002) 507 Chongqing Fuling Zhacai Group Co.Ltd(002507) )
Event: Chongqing Fuling Zhacai Group Co.Ltd(002507) released the annual report for 2021, and achieved a total operating revenue of 2.519 billion yuan, a year-on-year increase of + 10.82%, a net profit attributable to the parent company of 742 million yuan, a year-on-year increase of – 4.52%, and a net profit attributable to the parent company of 694 million yuan after deduction, a year-on-year increase of – 8.49%; Single Q4 achieved a total operating income of 563 million yuan, a year-on-year increase of + 18.74%, a net profit attributable to the parent of 238 million yuan, a year-on-year increase of + 45.75%, and a net profit attributable to the parent of 209 million yuan, a year-on-year increase of + 32.41%.
Revenue improved quarter by quarter in the 21st year, and cost pressure dragged down profit performance. 1) Throughout the year, the company’s brand focused on Wujiang mustard and deep cultivation channels in 21 years, with steady growth in revenue. The revenue of mustard / pickle / radish was + 12.7% / + 3.4% / – 30.8% year-on-year respectively; Cost pressure dragged down the performance of profit margin. In the past 21 years, the prices of green vegetable head and pickled mustard semi-finished products were + 80% / + 42% year-on-year respectively, resulting in the cost of main business + 13%, gross profit margin of 52.4%, year-on-year -5.9pct, sales expense rate of 18.9%, year-on-year + 2.7pct (if excluding the impact of transportation expense adjustment under the new accounting standards, the gross profit margin / sales expense rate in the past 21 years were – 2.3pct / + 6.3pct respectively), management expense rate of 2.9%, year-on-year + 0.4pct, financial expense rate of – 3.8%, year-on-year -2.3pct, It is mainly due to the contribution of interest income brought by fixed increase cash, with a net interest rate of 29.5%, year-on-year -4.7pct; 2) In terms of Q4 alone, with the return of benign inventory, large-scale terminal demand and the effect of price increase, the revenue of 21q4 increased by 18.7% year-on-year (21q2 / Q3 increased by – 10.8% / + 1.3% year-on-year respectively, which improved significantly quarter by quarter); Q4 confirmed 90.97 million transportation expenses at one time, resulting in a sharp decline in gross profit margin month on month and a negative sales expense rate. If the impact of transportation expenses is excluded, the gross profit margin of 21q4 is 52.2%, with a year-on-year increase of -7.5pct, which is mainly due to the upward movement of costs. The price increase was only reflected in December. The sales expense rate is 8.3%, with a year-on-year increase of -9.7pct. The narrowing of expense rate and investment income make the profit growth significantly faster than the revenue.
22 year Outlook: profit elasticity is expected to be released quarterly. In the short term, 22q1 dynamic sales are steadily superimposed with a high base, and the revenue end is expected to be flat year-on-year; Since 22q2 of fresh vegetables purchased at a low price at the beginning of the year was put into use, the cost pressure of 22q1 is still large. Considering the transmission of price increase, the profit of 22q1 is expected to be stable year-on-year; Throughout the year, 1) price increase transmission: the company has raised the ex factory price of some products in November 21, and the overall ton price is expected to increase by 10% – 15%. The price increase effect in December has been reflected, and it is expected that the ton price in 22 years is expected to achieve double-digit year-on-year increase; 2) Mitigation of cost pressure: it is estimated that the average purchase price of fresh vegetable head in 22 years will be – 35% year-on-year, and the improvement of cost side will be reflected from 22q2; 3) Cost rate optimization: brand investment such as advertising in 21 years will increase the sales cost rate, and the cost end is expected to improve in 22 years.
Investment advice. Considering that the dynamic sales are stable under the disturbance of the short-term epidemic, the profit forecast for 20222023 is fine tuned according to the annual report, and the forecast for 2024 is introduced. It is estimated that the operating revenue of the company in 20222024 will be 2.88/32.4/3.61 billion yuan (2.93/3.44 billion yuan before 20222023), a year-on-year increase of + 14.5% / + 12.5% / 11.4%; The net profit attributable to the parent company is RMB 1.02/12.2/1.39 billion (the value before 20222023 is RMB 1.04/1.32 billion), a year-on-year increase of + 37.7% / + 19.7% / + 13.6%. The current valuation corresponds to pe26x / 22x / 19x in 202224, maintaining the “buy” rating.
Risk tip: the industry demand is lower than expected, the industry competition is intensified, and the cost of raw materials is higher than expected.
