\u3000\u3 China Vanke Co.Ltd(000002) 507 Chongqing Fuling Zhacai Group Co.Ltd(002507) )
Summary of this issue:
Investment suggestion: as the absolute leader in the mustard industry, the company has raw materials, brand and channel barriers and pricing power. The packaging mustard industry continues the trend of simultaneous increase in volume and price, Chongqing Fuling Zhacai Group Co.Ltd(002507) market share is high, and the single oligarch pattern is stable. In the short term, the combination of cost reduction and price increase contributes to the performance elasticity. In the long run, the sinking of channels and the extension of categories promote the increase of volume, the increase of residents’ income supports the rise of price, and there is room for both volume and price to improve. We expect that the company’s EPS in 22-24 years will be 1.13/1.34/1.56 yuan respectively, and the corresponding PE will be 27.75/23.37/20.11 times respectively. It will be covered for the first time and given a “buy” rating.
The industry continues the trend of simultaneous rise in volume and price, and the single oligarch pattern is stable. The sales volume and average price of packaged mustard industry have maintained a growth trend. With the acceleration of the pace of life and the improvement of consumers’ material living standards, packaged mustard will continue to replace self pickled mustard. In addition, the diversification of downstream consumption scenarios has also opened up the incremental space for mustard sales. With many advantages such as brand, operation management and channel, packaging pickle manufacturers are also expected to seize the local pickle Market. The competition pattern of packaging mustard industry is stable, with Wujiang dominating, and the market share continues to exceed 30%. With the improvement of Wujiang brand influence and the expansion of territory and channels, the industry concentration is expected to be further improved.
Raw materials, brands and channels create high barriers. The company has the advantages of core raw materials. Green vegetable head is low value and vulnerable, and is listed intensively in the short term, with high transportation cost. Fuling is the largest producer of qingcaitou. The local special natural environment has formed a dense organizational structure of qingcaitou, which ensures the unique tender and crisp quality of the company’s products. Through the production mode of “company + cooperative + farmer”, the company is easy to form a good interest synergy and ensure the stable supply of green vegetables. The company’s brand awareness is leading, and the core value of “three pickling and three squeezing” is deeply rooted in the hearts of the people. Wujiang brand has occupied the minds of consumers. Under the new consumption trend, the company focuses on the concept of health and constantly upgrades the product value points. As the only nationwide enterprise in the mustard industry, the company implements the city centered precision marketing model, and the breadth and depth of channels are stronger than competitors, with obvious channel advantages.
In the long run, the sinking of channels and the extension of categories drive the increase of volume, and the improvement of residents’ income supports the rise of prices. The company has started a new round of channel sinking, set up county-level dealers, increased personnel and cost investment, and took the lead in focusing on the distribution of areas at and below the county level. We expect that the channel sinking will continue to contribute to the sales increment in the next three years. Relying on brand and channel advantages, the company develops to the pickle industry. The company will help turnip products diversify and expand, design different products for different channels and different consumer groups, and strengthen product display and new product promotion activities. Rising costs provide an opportunity for the company to raise prices, and the increase of residents’ income supports the price increase. Benefiting from the inflation dividend, we believe that the company still has the potential to continuously raise prices in the future.
Stock price catalyst: the price of raw materials decreased; Performance exceeds expectations, etc.
Risk factors: the price rise of raw materials is higher than expected; Sales growth was less than expected.
