\u3000\u3 Bohai Water Industry Co.Ltd(000605) 337 Zhe Jiang Li Zi Yuan Food Co.Ltd(605337) )
Key points of the report:
Sweet milk is the regional leader, and the classic product will last for a long time
the packaging and taste of Zhe Jiang Li Zi Yuan Food Co.Ltd(605337) sweet milk have hardly changed in more than 20 years, but it has not been eliminated by the times, but has successfully iterated from old users to new users. From 2017 to 2021, the company's revenue and net profit CAGR were 25.0% and 30.7% respectively, which shows that its classic products are still old and new.
"Taste + health" line breaks the game: "taste" provides a sense of pleasure, "health" gives differentiation
The scale of China's soft drink market has reached nearly one trillion yuan. Except bottled water and functional drinks, the development of flavored drinks is more mature, with a market scale of about 600 billion yuan. However, flavor drinks, especially pure flavor products, need to take the ultimate taste as the premise, but the research and development is difficult and easy to be imitated by giants. Therefore, the iteration of new products is fast but the life cycle is short. In contrast, the successful experiences of Yuanqi forest and yangleduo show that the "taste + health" product line is a better choice for small and medium-sized brands to break through. This route is in line with the general trend of consumption upgrading. On the basis of conforming to the public's aesthetic taste, it can give product differentiated competitive advantages through various "health" concepts, so as to avoid homogeneous competition with giants. Moreover, due to less contact with nutrition and other knowledge, the concept of "health" of mass consumers largely comes from the education of excellent products, which makes the brand master the leading power of defining "health".
Zhe Jiang Li Zi Yuan Food Co.Ltd(605337) "taste + health" has a clear positioning, and the strategic shift stimulates the brand potential
In terms of product positioning, Zhe Jiang Li Zi Yuan Food Co.Ltd(605337) sweet milk belongs to a typical "taste + health" soft drink. On the one hand, it mainly focuses on the most popular sweetness to meet consumers' pleasure, on the other hand, it creates health attributes with milk ingredients (from the perspective of unit sugar content and protein content, Zhe Jiang Li Zi Yuan Food Co.Ltd(605337) is healthier and more affordable than many well-known flavor drinks). In terms of market space, Wangzai milk and yogurt, which are similar to Zhe Jiang Li Zi Yuan Food Co.Ltd(605337) product tastes or key channels, are nearly 10 billion single products. Zhe Jiang Li Zi Yuan Food Co.Ltd(605337) is in line with the trend of consumption upgrading (especially sinking the market). It will penetrate and accumulate more target consumers in the national expansion, and the market space is broad. In terms of development prospects, the company's investment in channel construction and brand marketing is relatively conservative. With the accelerated national expansion after the company's listing, more resources begin to be invested in channel and brand construction, and the product potential will be further released.
Investment advice and profit forecast
The company is in a critical period of national expansion. The "taste + health" positioning of sweet milk products is clear, and the differentiated competitive advantage has been preliminarily verified in different regional markets such as income level and eating habits. With the gradual release of new production capacity, we expect the company to realize a net profit attributable to the parent company of RMB 262 / 322 / 409 million from 2021 to 2023, with corresponding earnings per share of 1.21/1.49/1.89 and P / E ratio of 27.19/22.15/17.46x respectively. The company will be given a "buy" rating for the first time.
Risk tips
Covid-19 epidemic situation is repeated, the price of raw materials continues to rise, and the production capacity is less than expected.
