\u3000\u3 China Vanke Co.Ltd(000002) 507 Chongqing Fuling Zhacai Group Co.Ltd(002507) )
Event: in 2021, the company realized an operating revenue of 2.519 billion yuan, a year-on-year increase of + 10.82%, and the net profit attributable to the parent company was 742 million yuan, a year-on-year decrease of – 4.52%, deducting 694 million yuan of net profit not attributable to the parent company, a year-on-year decrease of – 8.49%; In the single quarter of 2020q4, the company realized an operating revenue of 563 million yuan, a year-on-year increase of + 18.74%, and a net profit attributable to the parent company of 238 million yuan, a year-on-year increase of + 45.75%, deducting a net profit not attributable to the parent company of 209 million yuan, a year-on-year increase of + 32.41%. The company plans to distribute a cash dividend of 3.5 yuan (including tax) for every 10 shares.
The volume fell and the price increased, and Q4 improved significantly. In 2021, the company sold 134800 tons of pickled mustard, with a slight year-on-year decrease of 0.59%. The sales of radish and pickle were 46 / 10300 tons respectively, with a year-on-year decrease of – 36% / + 10% respectively. The sales of radish decreased greatly due to the adjustment of sales policy, but accounted for a very low proportion in revenue. In terms of price, the company raised the price indirectly by reducing the specification in June 2020, and raised the price of some sketch categories in some channels (supermarkets, etc.) at the end of 2020 and the beginning of 2021, driving the average price of products to rise in 2021. In November 2021, the company announced that the ex factory prices of some products were adjusted, and the increase range of each category was 3% – 19%, which further promoted the simultaneous rise of the volume and price of Q4 products, promoted the year-on-year increase of Q4 operating revenue by 18.74%, and the average price of pickled mustard products increased by 13.4%. We believe that the company raised the price by a large margin at the end of the 21st year, but the market acceptance is good. At the same time, the company continues to promote the upgrading and packaging of products, and the market rate of salt reduction products focusing on health is gradually increasing. The publicity combined with Guochao and health is conducive to helping the products further increase the price and open the incremental market.
Gross profit margin is under pressure in 21 years and is expected to improve significantly in 22 years. In 2021, the company’s gross profit margin was 52.36%, with a year-on-year increase of -5.9pct. At the beginning of 2021, affected by the snow disaster, the harvest of green vegetable head in Zhejiang Province, a major vegetable head planting Province, decreased significantly. At the same time, affected by the epidemic, the enthusiasm of some growers in Sichuan Province and other districts and counties in Chongqing except Fuling decreased, resulting in a decrease in the planting area of green vegetable head. In 2021, the purchase price of green vegetable head soared, and the annual average purchase price of green vegetable head and semi-finished mustard increased by about 80% and 42% respectively year-on-year, As a result, the cost of the company’s main business in the reporting period increased by about 13% year-on-year. In addition, the price fluctuation of bulk commodities in the middle of the year caused a sharp rise in the prices of packaging and auxiliary materials, and many factors raised the production cost. The gross profit margin of the company was 55.94% in the 21 years after the reduction of freight, with a year-on-year increase of -2.34pct. Looking forward to this year, in February, the company cut off the green vegetable head in an all-round way, and the guaranteed purchase price is 800 yuan / ton, which returns to the normal level, which is expected to significantly reduce the pressure on the cost of raw materials this year. Since the second half of last year, packaging materials have also increased significantly. Packaging materials account for about 10% of the operating revenue and about 20% of the cost. If the cost rises sharply, it will also have an impact on the company’s gross profit margin, but the impact is significantly lower than qingcaitou. Therefore, it is generally judged that with the increase of product prices and the decline of main costs, the gross profit margin will rise significantly this year.
The publicity efforts will be strengthened in the 21st year, and the cost-effectiveness ratio in the 22nd year is expected to improve. In 2021, the company invested 255 million yuan (only about 2.1 million yuan in the first two years) in brand building. China Central Television, ladder media, Internet public relations and ground formed a Wuxi Online Offline Communication Information Technology Co.Ltd(300959) all-round brand potential impact. After reducing the freight, the sales expense rate increased to 22.47%, with a year-on-year increase of + 6.28pct. In previous years, the company mainly relied on natural marketing, with little investment in publicity. In 21 years, the company vigorously publicized through multiple media, which helps to accumulate experience and improve the publicity efficiency in the coming year. In addition, due to the lag of brand publicity on sales, we speculate that the cost-effectiveness ratio of the company’s publicity fee is expected to increase significantly in 22 years, and the publicity fee rate will drop to less than 20% (restore the caliber).
Profit elasticity is gradually released, and product upgrading and channel intensive cultivation are expected to promote long-term performance growth. In 2022, the company’s target revenue is 2.896 billion yuan, which is expected to be + 15% year-on-year and the operating cost is – 1.03%. According to the data, the gross profit margin is estimated to be 59%, which is + 6.64pct year-on-year. We believe that the cost of green vegetables fell this year, superimposed on the price rise effect, and the profit elasticity was gradually released. The gross profit margin is expected to rise rapidly in the second half of the year. After the price was favorable in the first quarter, the sales volume is expected to pick up quarter by quarter, and the second half of the year is better than the first half of the year. In the long run, the company’s mustard products have the potential of continuous upgrading. With the release of new production capacity, new products are expected to gradually increase in volume. With the promotion of urban intensive cultivation and channel sinking, the marketing efficiency will be further improved and the market will be further expanded.
Profit forecast and investment rating of the company: we expect the net profit of the company from 2022 to 2024 to be 1.035 billion yuan, 1.141 billion yuan and 1.334 billion yuan respectively, corresponding to EPS of 1.17, 1.29 and 1.50 yuan respectively. The current share price corresponds to the PE value from 2022 to 2024, which is 26.11, 23.68 and 20.25 times respectively. We believe that the company’s performance in 2022 is high and the growth certainty is strong. We raised the rating and gave it a “strongly recommended” rating.
Risk warning: the epidemic has affected the production, transportation and distribution of the company’s products, and the demand is less than expected; Energy and packaging costs rose more than expected.
