\u3000\u3 Shengda Resources Co.Ltd(000603) 288 Foshan Haitian Flavouring And Food Company Ltd(603288) )
Event:
The company released its 2021 annual report. The total operating revenue of the whole year was 25.004 billion yuan, a year-on-year increase of + 9.71%, and the net profit attributable to the parent company was 6.671 billion yuan, a year-on-year increase of + 4.18%. The EPS was 1.58 yuan / share, and it was proposed to send 1 for every 10 shares and pay out 7.6 yuan (including tax).
Key investment points:
Actively respond to multiple pressures in the industry, and Q4 revenue exceeded expectations. The company’s Q4 single quarter revenue was 7.010 billion yuan, a year-on-year increase of + 22.85%, the net profit attributable to the parent was 1.963 billion yuan, a year-on-year increase of + 7.19%, and the non net profit deducted was 1.849 billion yuan, a year-on-year increase of + 4.02%. Q4’s revenue exceeded market expectations, mainly because the price increase stimulated the enthusiasm of the channel to prepare goods, superimposed on the early spring festival in 2021, and the channel prepared goods in advance. The company transited the favorable price period by offering new products and products with long inventory cycle. Up to now, the price increase in all channels has been basically completed. In 2021, facing the multiple pressures of the industry, such as weak consumer demand, rising raw material costs and the impact of community group buying, the company has gone through a very difficult year. During this period, through positive adjustment, it is not easy to achieve nearly double-digit growth in revenue.
The three categories grew steadily, and vinegar and cooking wine began to take shape. In terms of categories, soy sauce revenue was 14.19 billion yuan, a year-on-year increase of + 8.8%, which was mainly contributed by the year-on-year increase of 8.4% in sales volume; The income of oyster sauce was 4.53 billion yuan, with a year-on-year increase of + 10.2%, the sales volume increased by 11.5%, and the ton price decreased by 1.1% year-on-year. The decrease in ton price is expected to be mainly related to the decline of household consumption, the decline in the proportion of small-size oyster sauce, and the launch of community group purchase joint oyster sauce drainage products in the second half of the year; The revenue of seasoning sauce was 2.67 billion yuan, a year-on-year increase of + 5.6%, and the ton price was basically the same as that in the same period; The revenue of other categories was 3.62 billion yuan, a year-on-year increase of + 16.3%. Among them, Q4 soy sauce and oyster sauce achieved a growth rate of more than 20%, vinegar, cooking wine and other categories achieved a total revenue of 1.01 billion yuan, a year-on-year increase of 42.7%, and other categories other than the three categories grew rapidly. From a regional perspective, the revenue of the central region increased by 14% in the whole year, and the other regions achieved high single digit growth. Among them, the revenue of the central, southern, Eastern, Western and northern regions of Q4 increased by 30.5%, 21.0%, 20.3%, 19.7% and 12.1% respectively. By continuously promoting the deep cultivation of channels and network fission, the company has increased the reform of marketing manpower and achieved steady growth in regional revenue.
Affected by the rise of raw materials, the annual gross profit margin is under obvious pressure. In 2021, the overall gross profit margin of the company decreased by 3.51pct to 38.7%, which was mainly affected by factors such as rising costs and falling household demand. Q4 company raised the price of a full range of products and responded to the cost pressure by actively reducing costs and increasing efficiency. However, affected by the high price of Q4 raw materials and the double reduction policy, the gross profit margin of Q4 did not improve significantly month on month, and the gross profit margin of Q4 increased by 0.2pct to 38.1% month on month. In terms of expenses, the annual sales expense rate decreased by 0.56pct to 5.43% year-on-year. The company’s annual sales expenses were slightly tightened, mainly through popular variety shows such as “journey of youth”, “China Poetry conference”, as well as new media publicity forms such as live broadcast, grass planting and head talent cooperation, in close combination with consumption trends, so as to continuously improve brand awareness. The annual net interest rate decreased by 1.4pct to 26.7% year-on-year, of which Q4 net interest rate increased by 4.08pct to 28.0% month on month, with significant improvement month on month.
The annual goal is to make progress while maintaining stability, and actively adjust and respond to industry variables. In 2022, the company plans to increase revenue by 12% to 28 billion yuan and net profit by 12% to 7.47 billion yuan. Combined with the current demand and cost situation, the goal of this year is more cautious than that of previous years. Looking forward to the early spring festival in q2021, the catering demand is repeatedly affected by the epidemic. At the same time, the prices of main raw materials are still high and volatile, and the industry is still facing great variables. In this regard, in combination with the consumption trend and the current consumption environment, the company has increased the layout of the C-end retail market, such as powerhealth “0 series” products, launched cost-effective “Hui series” products, innovated packaging, etc. At the same time, the company continues to expand the category coverage, expand new categories such as seasoning, sesame oil, rice and edible oil, and explore new growth points while enriching the product structure. In addition, the cost side controls the upward pressure on costs by locking prices, reducing costs and increasing efficiency, and the price increase effect will be gradually reflected. Q1 is expected to be limited.
Profit forecast and investment rating: as a leader in the condiment industry, the company’s scale effect and cost control are far beyond the overall level of the industry. At present, the company’s price increase is conducted smoothly, and pays more attention to the development of new consumption trends and multiple categories. Considering that catering consumption is still affected by the repeated epidemic and the overall demand of the condiment industry is still weak, it is not appropriate to have too high expectations for the complete recovery of the company’s profitability in the short term. However, in the long run, the impact of community group buying and inventory pressure are gradually alleviated. Under this round of cost squeeze, the market share of the industry is expected to further tilt to the top enterprises. Haitian is expected to continue to grow faster than the industry. We expect the company to realize a net profit attributable to the parent company of 7.45/86.4/10.1 billion yuan from 2022 to 2024, with a year-on-year increase of + 12% / + 16% / + 17%, EPS of 1.77/2.05/2.40 yuan / share and PE of 51 / 44 / 38 times respectively. The company is rated as “overweight” for the first time.
Risk tips: 1) the price of raw materials rises sharply; 2) Intensified competition leads to sales falling short of expectations; 3) Food safety incidents; 4) The impact of the epidemic exceeded expectations; 5) The recovery of consumer demand did not meet expectations.
