\u3000\u3 China Vanke Co.Ltd(000002) 507 Chongqing Fuling Zhacai Group Co.Ltd(002507) )
Events
On the evening of March 17, 2022, the company released its 2021 annual report: in 2021, the company achieved a revenue of 2.519 billion yuan (year-on-year + 10.82%), a net profit attributable to the parent company of 742 million yuan (year-on-year – 4.52%), and a net profit not attributable to the parent company of 694 million yuan (year-on-year – 8.49%); In 2020q4, the revenue was 563 million yuan (year-on-year + 18.74%), the net profit attributable to the parent company was 238 million yuan (year-on-year + 45.75%), and the net profit not attributable to the parent company was 209 million yuan (year-on-year + 32.41%).
Key investment points
Rising costs, increased expenses and lower profit margin
Overall, the company’s annual revenue grew steadily, mainly due to the indirect price increase in 2020 and the direct price increase in 2021; The net profit decreased slightly, mainly due to the increase of raw material cost and the large investment of superimposed expenses. The higher growth of 2021q4 performance is due to the active channel intensive cultivation, sinking and price increase in the fourth quarter. In 2021, the company’s gross profit margin was 52.36%, year-on-year -5.90pct, and 2021q4’s gross profit margin was 36.08% (year-on-year -23.63pct). The decline in gross profit margin was mainly due to the impact of market supply and demand on the company’s main raw materials green vegetable head and pickled mustard semi-finished products. In 2021, the prices increased by about 80% and 42% year-on-year respectively, resulting in a year-on-year increase in the company’s cost of about 13. The net interest rate in 2021 was 29.46%, with a year-on-year increase of -4.73pct. In addition to the increase in costs, the sales expenses increased by 29.07% year-on-year, of which the net interest rate in 2021q4 was 42.30% (year-on-year + 7.84pct), mainly due to the decrease in sales expenses.
In 2011, the ratio of sales expenses / administrative expenses / financial expenses was 18.86% / 3.16% / – 3.80%, with a year-on-year increase of + 2.67 / + 0.33 / – 2.28pct. RMB 255 million was invested in brand building throughout the year, including China Central Television, ladder media, Internet public relations and ground, forming a Wuxi Online Offline Communication Information Technology Co.Ltd(300959) all-round brand potential impact; The increase of management expense rate is due to the increase of employee salary and amortization of intangible assets. In 2021, the net operating cash flow was 745 million yuan, a year-on-year decrease of 194 million yuan, of which the cash received from the company’s sales of goods was 2.804 billion yuan, higher than the revenue.
Mustard products grew steadily, and the markets in East and South China accelerated development
In terms of products, mustard / radish / pickle achieved a revenue of 2.226/0.69/159 billion yuan, a year-on-year increase of + 12.73% / – 30.77% / + 3.35%. Products focus on pickled mustard, and then gradually extend and upgrade to the parent category, vigorously develop new categories such as radish and kimchi, and newly develop 38 new products such as 88g crisp pickled mustard core, mass selling products, export series products, bean paste and so on. In terms of regions, the revenue of North China / Northeast China / East China / Central China / Southwest / Northwest / Central China / South China was 293 / 1.08 / 4.20 / 3.04 / 2.10 / 2.14 / 2.44 / 692 million yuan respectively, with a year-on-year increase of + 9.85% / + 13.80% / + 23.19% / + 13.16% / – 10.49% / + 2.95% / + 6.15% / + 15.15%. The market growth of East China and South China took the lead.
According to the split of volume and price, the total sales volume in 2021 was 153200 tons (year-on-year – 1.67%), and the corresponding ton price was 16429 yuan / ton (year-on-year + 12.72%), mainly due to the price increase of core products; Among them, the sales volume of pickled mustard / radish / pickle was 13.48/0.4610300 tons respectively, with a year-on-year increase of -0.59% / – 36.11% / + 9.57%. The corresponding ton price was 16516 / 15009 / 15434 yuan / ton, with a year-on-year increase of + 13.40% / + 8.36% / – 5.68%. Radish sales declined, mainly due to the adjustment of sales policy during the year. At the dealer level, by the end of 2021, there were 3030 dealers, with a net increase of 382. The channel sinking continued. The number of dealers in the eight regions showed an increasing trend, mainly contributed by the Central Plains, central China and East China.
Diversified development of products, with an annual growth target of 15%
Target for 2022: the revenue is 2.896 billion yuan, a year-on-year increase of + 15%; The main layout focuses on the following:
(1) brand side: the brand focuses on the two themes of Wujiang mustard upgrading and product matrix development, and continues to increase brand exposure with “Online + offline”. Among them, Wujiang kelp silk, Wujiang pickled mustard tuber sauce and Huitong next meal brand are publicized through product display, and new products such as bean paste are put into practice “Internet plus ground communication”.
(2) product side: mustard has been upgraded, focusing on the three growth points of price adjustment, health and innovation, and implementing the three key actions of terminal price adjustment, upgrading and version change, national tide and health publicity; Transform to diversification and help turnip products become diversified and bigger with strategic resources to form large single products; Extend the development of leisure snacks, try to enter the sauce category, and launch new products such as Douban sauce.
(3) channel side: continue to promote market intensive cultivation and channel sinking. Tactically, pay close attention to the implementation of the strategic measures of “urban precision marketing and reshaping the market structure”; Focus on market intensive cultivation and channel sinking, expand channels to counties and townships, and dealers grow rapidly.
Profit forecast
Looking forward to 2022, the price of raw materials qingcaitou will fall smoothly; With the release of production capacity and the large volume of new categories such as radish, the overall profitability of the company is expected to be improved. We are optimistic that the smooth implementation of the company’s price increase will lead to price increase. The coordinated development of multiple categories, mainly pickled mustard, will lead to both volume and price increases. With the steady progress of channel sinking, the company’s performance will be gradually released. We expect EPS to be 1.16/1.42/1.70 yuan from 2022 to 2024, and the current share price corresponding to PE is 26, 21 and 18 times respectively, maintaining the “recommended” investment rating.
Risk tips
Macroeconomic downside risk, epidemic drag on consumption, regional expansion less than expected, new product promotion less than expected, price increase less than expected, new product promotion less than expected, capacity digestion less than expected, raw material price rise, etc.
