Basic conclusion
In the short term, the epidemic situation has repeatedly weakened the demand, and the annual dimension is waiting for the condiment business cycle to rise. The epidemic has a significant impact on consumer confidence and consumer demand, but with the normalization of the epidemic, we expect this impact to gradually weaken. The recent epidemic situation is fierce and covers a wide range, and the number of confirmed cases in the country has increased sharply. However, the conversion rate of asymptomatic cases to confirmed cases has decreased. With the improvement of vaccine coverage and the weakening of epidemic threat, the public's confidence in combating the epidemic situation has become more full. In the short term, the epidemic has a great impact on catering, and the medium and long-term dimension is optimistic about the upward industry cycle. According to channel feedback, during the Spring Festival, the inventory and movable sales have been improved, and the price increase and landing of various brands will be concentrated at the end of the first quarter. At that time, if the double benefits of demand recovery and cost pressure easing are superimposed, it is expected that the report end of the second quarter will be improved.
The impact of the last round of inflation on the profit side. The seasoning retail price index has significantly outperformed the consumer price index CPI and commodity retail price index in recent 10 years, showing a good anti inflation attribute. Soy sauce: the gross profit margin is directly affected by raw materials and decreases slightly, while the net profit margin often experiences a "V" trend in 1-2 quarters after the price increase of products. The rise of sales expenses leads to a significant decline of 3% - 5% in the net profit margin Jiangsu Hengshun Vinegar-Industry Co.Ltd(600305) : the last round of cost pressure lasted for more than two years, mainly due to the alternating rise in the prices of glutinous rice and packaging materials, and the repeated rise in the prices of glutinous rice. The decline of gross profit margin was small, and it was soon repaired one quarter after the price increase. The net interest rate fluctuates greatly and is very sensitive to selling expenses Chongqing Fuling Zhacai Group Co.Ltd(002507) : as the green vegetable head can be stored in advance, the raw material pressure of mustard is usually delayed for half a year, affecting the gross profit margin. The sales expenses are obviously cyclical, so the net interest rate is more flexible, and the change between quarters often exceeds 10% Angel Yeast Co.Ltd(600298) : benefiting from the leading position in the industry, it can quickly and repeatedly raise prices for hedging after being squeezed by costs. Therefore, the change range of gross profit margin and net profit margin is small, and the repair speed is relatively fast.
The impact of this round of price increase is different in that: 1) the upper limit of this round of cost increase is almost doubled, causing greater pressure on companies. 2) This round of cost increase lasts longer. It has been rising for six quarters since 2020q3, and soy sauce and yeast are still under pressure. The last round ended in six quarters except vinegar. 3) This round is focused on 2021q3 price increase, which is slightly higher than the previous round. 4) This round has a greater impact on the gross profit margin and net profit margin, and the feedback of gross profit margin and net profit margin on the rise of costs is more timely.
Sensitivity analysis and calculation of gross profit margin. Soy sauce: price increase can fight inflation. Under neutral conditions, when the total cost rises by 2%, the gross profit margin can still increase by 1%. The situation of Qianhe Condiment And Food Co.Ltd(603027) is more optimistic Jiangsu Hengshun Vinegar-Industry Co.Ltd(600305) , Chongqing Fuling Zhacai Group Co.Ltd(002507) : the price of raw materials has declined, and the profit growth space is the most certain. The neutral assumption is that the gross profit margin will increase by 2% Angel Yeast Co.Ltd(600298) : if the price of molasses continues to rise, the gross profit margin is at risk of falling by 3%. Considering that Angel Yeast Co.Ltd(600298) plans three hydrolyzed sugar projects, the impact of cost pressure on gross profit margin is expected to be reduced to 2%.
Investment advice
We believe that the epidemic in March this year will cause significant pressure on the catering side and hinder the promotion activities of Ka channel. At the same time, the rising cost is a short-term disturbance, but it lacks sustained power in the long term. Condiment, as a necessity of life, has small demand elasticity, and the impact of the epidemic on the industry is limited. The calculation of gross profit margin sensitivity shows that the price increase can basically cover the cost pressure. At present, some companies have been at the low valuation point in the five-year period. We should continue to pay attention to the change trend of the epidemic situation, the change of the company's inventory and movable sales, and the improvement of the industry competition pattern, trade time for space and wait for the inflection point to appear. In combination with valuation and fundamentals, recommend Foshan Haitian Flavouring And Food Company Ltd(603288) , a high-end leader with strong brand power and channel power, Qianhe Condiment And Food Co.Ltd(603027) , a high-end leader with large profit elasticity, Chongqing Fuling Zhacai Group Co.Ltd(002507) , Angel Yeast Co.Ltd(600298) , which have an advantageous competition pattern and strong cost transfer ability.
Risk tips
The risk of continuous epidemic, rising cost of raw materials, food safety and intensified competition
