\u3000\u3 China Vanke Co.Ltd(000002) 507 Chongqing Fuling Zhacai Group Co.Ltd(002507) )
Events
On the evening of March 24, 2022, the company announced that “the construction project of kimchi production base with an annual output of 50000 tons”, of which two production lines have been officially completed and put into operation recently, with an additional capacity of 25000 tons / year.
Key investment points
Steady progress was made in capacity construction, with a planned capacity of more than 500000 tons
After increasing the production capacity of 25000 tons of pickles, the company now has a production capacity of about 160000 tons of pickles, 59000 tons of pickles and more than 10000 tons of radishes, totaling about 229000 tons.
In November 2020, the company will increase by no more than 3.3 billion yuan to build Wujiang Chongqing Fuling Zhacai Group Co.Ltd(002507) green and intelligent production base (phase I). After reaching the production capacity, the company will add 200000 tons of pickled mustard. In addition, according to the 2021 interim report, the company’s projects under construction include the construction project of Liaoning pickle production base with an annual output of 50000 tons, Huitong 53000 tons / year mustard production line and 16000 tons / year crispy mustard production line. We expect that the long-term planned production capacity of pickled mustard, pickled cabbage and radish will reach 36000 tons, 84000 tons and 60000 tons respectively, with a total of about 500000 tons. In terms of pits, the capacity of the company’s self built pits has increased from the initial 100000 tons to 300000 tons. With the newly raised 407000 tons of raw material pits, the long-term pit capacity will reach 700000 tons. Capacity planning will effectively meet the growth of demand.
Diversified development of products, optimistic about the incremental development brought by new categories
Products focus on pickled mustard, and then gradually extend and upgrade to the parent category, vigorously develop new categories such as radish and pickle, and develop 38 new products such as 88g crisp pickled mustard core, mass selling products, export series products and bean paste in 2021. The company’s new light salt pickled mustard has sold 200 million packages in 16 pre-sale cities in a short time, and more than 100 million packages have been placed nationwide at the new product launch. The upgraded version of pickled mustard will drive the growth of pickled mustard categories.
In the future, the company will use strategic resources to help the diversification and expansion of radish products and form large single products; Extend the development of leisure snacks, try to enter the sauce category, and launch new products such as Douban sauce to realize the coordinated development of multiple categories. Lay the foundation for production capacity, new categories will bring incremental development, and the annual target of 15% is expected to be successfully achieved.
Profit forecast
Looking forward to 2022, the price of raw materials qingcaitou will fall smoothly; With the release of production capacity and the large volume of new categories such as radish, the overall profitability of the company is expected to be improved. We are optimistic that the smooth implementation of the company’s price increase will lead to price increase, and the coordinated development of multiple categories, mainly pickled mustard, will lead to volume increase. With the steady progress of channel sinking, the company’s performance will be gradually released. We expect EPS to be 1.17/1.42/1.70 yuan from 2022 to 2024, and the current share price corresponding to PE is 28, 23 and 19 times respectively, maintaining the “recommended” investment rating.
Risk tips
Macroeconomic downside risk, epidemic drag on consumption, regional expansion less than expected, new product promotion less than expected, price increase less than expected, new product promotion less than expected, capacity digestion less than expected, raw material price rise, etc
