\u3000\u3 Shengda Resources Co.Ltd(000603) 288 Foshan Haitian Flavouring And Food Company Ltd(603288) )
Event: Foshan Haitian Flavouring And Food Company Ltd(603288) released the annual report of 2021. During the reporting period, the company achieved a revenue / net profit attributable to the parent company of RMB 25.0046671 billion, a year-on-year increase of + 9.71% / + 4.18%; Among them, 21q4 achieved an operating revenue / net profit attributable to the parent company of RMB 7.0101963 billion, a year-on-year increase of + 22.85% / + 7.19%.
Revenue slightly exceeded expectations and grew rapidly online. 1) In terms of products, soy sauce / sauce / oyster sauce achieved revenue of RMB 14.19/26.7/4.53 billion respectively in 21 years, a year-on-year increase of + 8.8% / + 5.6% / + 10.2%. The growth of soy sauce / seasoning sauce / oyster sauce revenue mainly comes from the contribution of sales volume, and the unit price is basically the same as that of the previous year. 2) In terms of regions, the Western / Eastern / central / Southern / northern region achieved an operating revenue of RMB 2.94/48.2/53.1/44.7/6.06 billion, a year-on-year increase of + 9.3% / + 7.5% / + 14.0% / + 8.4% / + 6.7%. By the end of 2021, the company had a total of 7430 dealers, an increase of 379 compared with the end of 2020, of which the largest number of dealers in the eastern region was 98. 3) By channel, the offline channel revenue was 22.89 billion yuan, a year-on-year increase of + 7.7%; Online channel revenue was 700 million yuan, a year-on-year increase of + 85.2%. The rapid growth of online revenue is mainly due to the company’s accelerated layout and development in new retail channels in the second half of 21 years and initial results. Looking at the fourth quarter alone, the company’s revenue performance exceeded expectations and the growth rate increased significantly month on month. This is mainly due to the active preparation of goods by dealers after the price increase and the promotion of goods preparation during the Spring Festival.
Affected by the rising cost of raw materials, the gross profit margin fell. (1) The gross profit margin in 2021 was 38.66%, with a year-on-year increase of -3.51pcts. The decline of gross profit margin was mainly affected by the rise of raw material prices. (2) In 2021, the company’s sales expense ratio was 5.43% respectively, with a year-on-year increase of -0.56pcts. (3) In 2021, the company’s management expense ratio was 1.58%, with a year-on-year increase of -0.01pcts. (3) Overall, the net profit margin of the company’s sales in 2021 was 26.68%, a year-on-year increase of -1.44pcts.
The price increase was conducted smoothly, and the mobile sales during the Spring Festival were stable. Haitian issued a price adjustment announcement in October, and has successfully completed the implementation of terminal price. Although the channel survey feedback that the terminal inventory is at a high level, after the price increase, the channel profit is thickened, the power is increased, the superimposed demand is gradually improved, and the inventory problem is expected to be gradually alleviated. From a medium and long-term perspective, the company’s investment in sub categories has accelerated, and promoted the assessment of the division by category, making the category development more dynamic. While consolidating the dominant position of core categories, the company actively promotes product innovation and category extension, and marches into platform enterprises, which is expected to further open medium and long-term development space.
Profit forecast, valuation and rating: considering the repeated epidemic and the uncertainty of the recovery of terminal demand, we lowered the EPS forecast of Foshan Haitian Flavouring And Food Company Ltd(603288) 2022-2023 to 1.77/2.07 yuan respectively (7.7% / 9.1% lower than the previous time), introduced the EPS forecast of 2024 to 2.39 yuan, and the current share price corresponding to PE of 202224 is 50x / 43x / 37x respectively. We are optimistic about the positive significance of the price increase and maintain the “buy” rating. It is suggested to focus on tracking the channel inventory and operation changes of Haitian, which has important guiding significance for the whole industry.
Risk warning: the rising range of raw material cost is higher than expected; Food safety issues; Category expansion was less than expected.
