\u3000\u3 Shengda Resources Co.Ltd(000603) 719 Bestore Co.Ltd(603719) )
Key investment points
Event: the company released the annual report of 2021, the revenue met the expectations, and the performance was slightly lower than the expectations. In 2021, the company achieved revenue of 9.324 billion yuan, yoy + 18.11%; The net profit attributable to the parent company was 282 million yuan, yoy-18.06%. In 2021q4 alone, the company achieved a revenue of 2.755 billion yuan, yoy + 16.53%; The net profit attributable to the parent company was – 34 million yuan, yoy-142%.
Product innovation in market segments and continuous in-depth Omni channel business layout. In terms of products, the growth of fried nuts, candy and pastries is prominent, and the substantial growth of sales of gift boxes has led to the growth of sales scale of other products. By the end of 2021, the company had 1555 omni-channel SKUs. In 2021, there were 565 SKUs for new products. The revenue of the company’s fried nuts / dried preserved fruits / meat snacks / vegetarian mountain treasures / candy pastries / other products increased by 20.8/5.97/9.31/3.36/21.58/46.92% year-on-year respectively. In terms of channels, the company’s revenue from all channels showed an increasing trend in 21 years, and the group purchase business and online revenue increased more. (1) Offline business: in the past 21 years, the company’s franchise business income was 2.556 billion yuan, an increase of 8.76%, and the direct retail business income was 1.409 billion yuan, an increase of 14.45%. By the end of 2021, the company had 2974 offline stores and 619 new stores, including 185 Direct stores and 434 franchise stores. Among them, 139 new stores were opened in Southwest China throughout the year, and 72 new stores were opened in South China through deep exploration of new resources and cooperation mode with big owners. (2) Online business: in 21 years, the company’s online main business income was 4.858 billion yuan, an increase of 21.42%. In 2021, the company could reach 120 million of all channels, with more than 62 million 450 thousand members, including 34 million 410 thousand members, 11 million 990 thousand members, 13 million 190 thousand members, 3 million 600 thousand members and 2 million 150 thousand members of APP in 2021. In 2021, member sales accounted for about 61.16% of the company’s total sales. (3) Group purchase business: the group purchase business income was 321 million yuan, an increase of 208.58%. The provincial Gift Distribution Agency of the group purchase business of the company has covered 14 provinces in China, and has developed a new distribution model of industry associations.
Online business expansion accelerated and profitability declined in the short term. 21q4’s gross profit margin was 20.25%, down 4.28pct year-on-year (comparable caliber). We expect that the main reasons are as follows: (1) the company further expanded the market share of traditional platform e-commerce and strengthened the promotion during double 11 and double 12; (2) The gross profit margin of annual gift boxes with an increased proportion in the product structure is low; (3) The cost of imported raw materials (beef, nuts, etc.) has increased; (4) The impact of the epidemic and the characteristics of gift boxes have raised the transportation rate. Increase the distribution of emerging traffic channels such as social (live broadcast) e-commerce and community e-commerce, increase the investment of marketing promotion expenses, and improve the market share of all channels. At the same time, due to the increase of the proportion of online channels and other factors, the gross profit margin of the company’s online business in the fourth quarter decreased in a short period compared with the same period, resulting in the decrease of the company’s net profit compared with the same period. 21q4’s sales expense ratio was 15.27%, up 2.73pct year-on-year (comparable caliber). We expect that the main reasons are: the proportion of online business has increased and the social e-commerce business has expanded rapidly. To sum up, the net interest rate in the fourth quarter was – 1.22%, and the net interest rate of the company in 2021 was 3.03%, with a decrease of 1.33pct.
Investment advice: maintain the “buy” rating. Considering that the epidemic affects short-term sales and multi-channel expansion disturbs short-term profit margin, we expect the company’s revenue in 22-24 years to be RMB 11.042/13.05/15.05 billion respectively, net profit to be RMB 408/4.94/578 million respectively, EPS to be RMB 1.02/1.23/1.44 respectively (RMB 1.31 and 1.50 in the previous 22-23 years), corresponding to current PE to be 28x, 23x and 20x, maintaining the “buy” rating.
Risk tips: the epidemic continues to spread, the price of raw materials fluctuates, market competition intensifies, and food safety incidents.
