\u3000\u3 Shengda Resources Co.Ltd(000603) 288 Foshan Haitian Flavouring And Food Company Ltd(603288) )
Key investment points
Event: the company issued the annual report of 2021. In 2021, the company realized an operating revenue of RMB 25.004 billion, a year-on-year increase of 9.71%; The net profit attributable to the parent company was 6.671 billion yuan, a year-on-year increase of 4.18%; The net profit deducted from non parent company was RMB 6.430 billion, with a year-on-year increase of 4.09%.
Comments:
The company’s 2021q4 performance accelerated month on month. In a single quarter, the company achieved an operating revenue of 7.010 billion yuan in 2021q4, a year-on-year increase of 22.85% and a month on month increase of 23.81%; The net profit attributable to the parent company was 1.963 billion yuan, a year-on-year increase of 7.19% and a month on month increase of 44.87%. Disturbed by the weak end consumer demand, the impact of community group purchase, the high base in the same period and other factors, the company’s 2021q2 performance is under pressure. With the stricter supervision of community group buying and the steady progress of destocking, the company’s 2021q3 performance improved month on month. In the fourth quarter, the company’s performance further accelerated month on month against the background of the normalization of the epidemic and dealers’ stock in the Spring Festival.
The company’s core product performance achieved steady growth in 2021, and the oyster sauce business grew the fastest. On the basis of consolidating the original categories, the company has accelerated the development of new products and continuously optimized and upgraded the product structure. At present, soy sauce, oyster sauce and seasoning sauce are the three core products of the company. In 2021, the revenue increased by different ranges, among which oyster sauce business grew the fastest. According to the specific data, the company’s revenue of soy sauce in 2021 was 14.188 billion yuan, a year-on-year increase of 8.78%; Oyster sauce achieved a revenue of 4.532 billion yuan, a year-on-year increase of 10.18%; Seasoning sauce achieved a revenue of 2.666 billion yuan, a year-on-year increase of 5.61%. In the fourth quarter alone, the company’s operating revenue of soy sauce, oyster sauce and seasoning sauce was 4.005 billion yuan, 1.34 billion yuan and 658 million yuan respectively, with a year-on-year increase of 20.78%, 21.38% and 13.64% respectively.
Online channels have achieved rapid development and brand influence has continued to improve. In terms of sub channels, the company has accelerated the development of online business on the basis of strengthening the advantages of offline channels, and the online business has shown a good development momentum. In 2021, the company’s offline channels achieved an operating revenue of 22.892 billion yuan, a year-on-year increase of 7.73%; Online channels achieved operating revenue of 704 million yuan, an increase of 85.20% year-on-year. In order to further improve the company’s market penetration, the company’s dealer team will be further expanded in 2021. By the end of 2021, the company had 7430 dealers, with an increase of 379. Meanwhile, the company increased its marketing input, and promoted its brand awareness through famous variety programs such as the “youth ring travel”, “China Poetry conference” and “make complaints about the conference”. According to the 2021 Asian brand Footprint Report, the company was selected into the top ten preferred brands of Chinese consumers with 620 million consumers and 79.4% penetration rate, and the brand influence continued to improve.
The company’s 2021q4 profitability improved month on month. Since 2021, the prices of raw materials such as soybeans and packaging materials have continued to rise, and the company is facing greater cost pressure. In the context of accelerating operating income month on month, the company’s Q4 profitability has improved month on month. In 2021q4, the company achieved a gross profit margin of 38.13%, a year-on-year decrease of 3.73 percentage points and a month on month increase of 0.22 percentage points. From the cost side, the company’s 2021q4 cost structure has been optimized month on month. The sales expense ratio of 2021q4 company was 4.30%, down 2.41 percentage points month on month; The management fee rate was 4.98%, down 0.27 percentage points month on month. Based on the combination of gross profit rate and expense rate, the company achieved a net profit rate of 27.99% in 2021q4, a year-on-year decrease of 4.12 percentage points and a month on month increase of 4.07 percentage points.
Maintain recommended ratings. It is estimated that the company’s EPS from 2022 to 2023 will be 1.77 yuan and 2.09 yuan respectively, and the corresponding PE will be 51 times and 43 times respectively. In October 2021, the company announced the price adjustment of some products. At present, the channel feedback products have basically completed the favorable price, and the follow-up is expected to be reflected in the statement end. In addition, the capacity of the company’s new production base is expected to be gradually released in 2022, and the company’s fundamentals are expected to continue to improve. The company plans to achieve an operating revenue of 28 billion yuan and a net profit attributable to the parent company of 7.47 billion yuan in 2022. In the follow-up, we need to continue to pay attention to terminal demand, upstream cost price and other factors. Maintain the “recommended” rating of the company.
Risk warning. Raw material price fluctuation risk, product price increase is less than expected, channel development is less than expected, and food safety risk.
