\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 882 Shanghai Milkground Food Tech Co.Ltd(600882) )
Event overview
According to Nielsen data, the retail sales of cheese industry in January 2022 were + 42% year-on-year. Supermarket channels monitored by Muding commodity information center Shanghai Milkground Food Tech Co.Ltd(600882) January 2022 retail sales + 84% year-on-year.
Analysis and judgment:
1. The cheese retail market is still growing. According to Nielsen data, the retail sales of the cheese industry in 2021 were + 39% year-on-year, of which the retail sales in the first and second half of the year were + 49% and + 31% year-on-year respectively, and the retail sales in January 2022 were + 42% year-on-year. We believe that the year-on-year growth of retail sales in January is affected by the dislocation of the Spring Festival. Nevertheless, from the absolute level of year-on-year growth, the cheese retail market in 2022 is still in a growth period. Following Shanghai Milkground Food Tech Co.Ltd(600882) , Yili, miaofei and other brands listed their own normal temperature cheese stick products and gift box products at the end of the year and during the Spring Festival, contributing to the market.
2. Shanghai Milkground Food Tech Co.Ltd(600882) is favored by channel providers again. The retail sales of Shanghai Milkground Food Tech Co.Ltd(600882) in the supermarket channel monitored by Muding commodity information center in January were + 84% year-on-year, and + 54% month on month in December 2021. The retail sales of Shanghai Milkground Food Tech Co.Ltd(600882) in this channel in 2021 were + 38% year-on-year. Although the January data are also disturbed by the dislocation factors of the Spring Festival, considering that Shanghai Milkground Food Tech Co.Ltd(600882) launched the Spring Festival gift box products and the normal temperature cheese stick products listed in October are in force during the Spring Festival, the January data indicates a “good start”. In addition, it should be considered that in the past three years, with the rapid growth of Shanghai Milkground Food Tech Co.Ltd(600882) cheese stick sales, the company continued to increase investment in brand publicity and promotion, firmly occupied the minds of consumers, and thus formed a benign terminal dynamic sales (better price and faster turnover compared with competitive products). After Q1 last year, the industry competition was intensified. According to Nielsen data, the retail sales of baijifu, Mengniu, Guangming and other brands entered a year-on-year downward trend from March to April. We judge that in 2022, the dealer customers adjusted the brand selection and resource allocation based on the past dynamic sales performance of the brand, and Shanghai Milkground Food Tech Co.Ltd(600882) won the favor of channel dealers again, which also promoted the sales situation since the beginning of the year.
3. Focus on product innovation in 2022. In 2022, the company will gradually build a multi product matrix. We believe that in 2022, the rapid distribution of normal temperature cheese sticks, the upgrading of low-temperature cheese sticks and the adjustment of organization and management structure will promote the annual sales of cheese sticks from about 3 billion yuan to about 5 billion yuan; On February 21, the advertising film of cheese slice was launched, which is the first new product advertising film other than the cheese stick, promoting the expansion of the consumption scene of cheese into the family and dining table. We expect to reach hundreds of millions of yuan in sales this year. We believe that in 2022, when the cheese stick continues to maintain rapid growth, the company’s product innovation in the field of cheese will accelerate, which will open up more consumption scenarios, provide more high margin product choices for channels, and expand the leading advantage over competitors at the product level.
4. The profit situation in 2022 is expected to be better. At the beginning of 2022, the company held the signing meeting of performance responsibility certificate for the new year, emphasizing the effects of increasing revenue and reducing expenditure and scale. We believe that under the pressure of the epidemic, the withdrawal of small brands and the differentiation of sales performance of major brands will become more obvious in 2022. Price competition has proved to be not the most effective means for children’s snacks in the past two years, Shanghai Milkground Food Tech Co.Ltd(600882) revenue volume will further increase, the investment in advertising expenses will show a scale effect, and the company is expected to achieve satisfactory profitability under more strict expense control.
Investment advice
According to the third-party data, Shanghai Milkground Food Tech Co.Ltd(600882) in January saw a bright growth in retail sales through supermarkets. Combined with the company’s fundamental judgment, we are looking forward to Q1’s good start. We are waiting for the accurate financial figures disclosed in the annual report. Before that, we maintain the revenue forecast of 4.6/66/8.5 billion yuan in 202123, the net profit attributable to parent company forecast of 167 / 5.3/970 million yuan in 202123, EPS of 0.32/1.02/1.89 yuan, corresponding to the closing price of 35.73 yuan in 2022 / 3 / 17, and P / E of 110 / 35 / 19 times respectively. Recently, due to market factors, the share price has been greatly adjusted. We think it has been underestimated and adjusted from the overweight rating to the buy rating.
Risk tips
① the sales of new products at normal temperature is less than expected; ② Market competition intensifies risks; ③ Food safety issues.
