\u3000\u3 China Vanke Co.Ltd(000002) 557 Chacha Food Company Limited(002557) )
Core view: melon seeds and nuts grow in two rounds, and the channel end continues to expand
We believe that the consumption capacity of Chinese residents will continue to improve, and the leisure food track as a part of “a better life” will also continue to expand. The company has grown into the first brand of melon seed category, with strong brand strength + channel control ability + upstream supply chain control and guarantee ability. The development history of the company is reviewed, and the internal mechanism construction of the company has been gradually completed since 2015, From the functional business unit (Guokui, fried goods, nuts, baking, sales, etc.) plus BU business unit to the reform of business division system in 2021, the main business lines of the company’s melon seeds, nuts and snacks are driven to grow rapidly:
(1) the ability to guarantee the supply of raw materials of upstream melon seeds is outstanding: the company has formed a complete “company planting + order purchase” mode. In the procurement season before 2022, 60% of the annual melon seeds consumption has been prepared, and the purchase price has increased by 5% – 10%, which is generally controllable; The purchase price of nuts is basically stable. On October 22, 2021, the price of melon seed series was increased by 8% ~ 18% to hedge the cost disturbance of raw materials and freight.
(2) melon seeds are basically stable and nuts are developing rapidly: the company achieved a revenue of 5.289 billion yuan in 2020, including 3.725/9.50/614 billion yuan of melon seeds / nuts / snacks, accounting for 70.43% / 17.96% / 11.61% respectively; “Red bag and blue bag” melon seeds are basically stable, nuts are continuously in large quantities, and snacks are incubated and cultivated; By the end of 2020, a three-year target of 10 billion yuan (including tax) is proposed, of which melon seeds / nuts / leisure snacks will reach 6 / 30 / 1 billion yuan (including tax) respectively.
(3) complete organizational mechanism and promote the “million terminal” plan through channels: Qiaqia has 400000 terminals offline and is promoting the “million terminal” plan through the digital terminal system. The reform of the division system will be carried out in May 2021, combined with the one-year employee stock ownership plan, which will effectively improve the enthusiasm of the team.
Investment suggestion: the company has significant brand advantages, outstanding upstream cost control ability and channel control ability. The share price on March 24 corresponds to the expected pe23x in 2022, which is at the bottom of history. We believe that the overall cost of the company in 2022 is controllable, the echelon development ability of melon seeds, nuts and snack lines is good, the profitability is stable, has long-term investment value, and the short-term valuation advantage has been highlighted.
Risk tips: product expansion is less than expected, channel expansion is less than expected, raw material prices rise sharply, and food safety problems.
