\u3000\u3 China Vanke Co.Ltd(000002) 570 Beingmate Co.Ltd(002570) )
The company’s Q4 performance has a high probability of reversal, and the cash flow from operating y] activities continues to expand. According to the performance forecast of 2021 previously released by the company, it is expected that the company will realize a net profit attributable to the parent company of 60-90 million yuan and deduct non net profit of 6-9 million yuan in 2021, turning losses into profits year-on-year. In q1-3 of 2021, the company recorded a net profit attributable to the parent company of 38.75 million yuan, deducting non net profit of – 7.97 million yuan. From the perspective of disassembly, the net profit attributable to the parent company of Q4 is expected to be 21.25-51.25 million yuan, and the net profit deducted from non net profit is expected to be 13.97-16.97 million yuan, turning losses into profits year-on-year, and laying the tone for the reversal of annual performance. On the other hand, compared with the company’s net profit, its cash flow from operating activities has already reversed in advance. Since Q3 in 2019, the company’s cash flow from operating activities has continued to improve, reaching 92 million yuan in Q3 in 2021, much higher than the net profit attributable to the parent company in the same period.
The return of the founders boosted morale, reduced costs and increased efficiency, and paid close attention to management. Xie Hong, the founder, resigned from all positions of the company due to personal reasons in 2011, and took up the post of general manager again from January 2021 and operated the business in person. Xie Hong’s return, on the one hand, has effectively boosted the morale of the company’s bumpy and frustrated development, and the internal staff and dealers are full of confidence; On the other hand, it also brings practical measures for the reform of the company. The company’s data-driven business model is based on the number of customers, and a new data-driven business model is established. In terms of products, baby powder business, the company adopts a multi category strategy, focusing on high cost-effective products, and the price of the main single product Aijia is around 370 yuan / kg; At the same time, around the mother infant ecosystem, the company provides infant supplementary food, children’s snacks, nutrition, special medical food and other products. In terms of operation, the company promotes cost reduction and efficiency increase in multiple dimensions. On the capacity side, the company actively negotiates and cooperates with various parties, promotes OBM, ODM and OEM projects, and makes full use of surplus capacity. On the channel side, the company actively promotes the cooperation of direct supply system and platform, reduces the dealer level and thickens the profits of the company and terminals. At the organizational structure side, the company streamlines the middle and back office, improves the sales side, and encourages all staff marketing. According to the company’s research, since the return of the founders, the gross profit margin and net profit margin of the company’s comparable businesses with the same caliber have increased.
The prospect of the industry is good, and the company will pay close attention to the stock and increment this year. In recent years, the number of newborns in China has continued to decline. After the outbreak, some couples’ pregnancy preparation plans were postponed, and the decline rate further intensified after October 2020. With the decline of virus virulence and the gradual control of the epidemic, the number of newborns is expected to return to the level of 12 million in 2020. On the other hand, the rising per capita consumption of each stage of milk powder, especially the per capita consumption of the third stage of milk powder, will boost the overall scale of the infant powder market. In terms of competition pattern, due to the influence of fleeing goods and disorderly prices, the price of some competitors has fluctuated recently. However, the company adheres to cost-effective products and simplified channel mode, always controls the price and ensures the interests of channels. The market share is expected to benefit from the price war. On the other hand, the company’s long-term accumulated R & D system and excellent product quality will also make its products break through the rising tide of domestic milk powder and the secondary registration of the new national standard.
In 2022, the company will promote stock and incremental business from three aspects. First of all, the company will continue to strengthen the basic sector of milk powder in traditional channels and improve the sales of original categories (such as Aijia Series). Secondly, the company will vigorously promote the sales of new products keruixin through direct supply channels and Jingai through online channels. As an innovative work of the company to solve the problem of digestion and absorption of babies, keruixin integrates probiotics, prebiotics, OPO and hydrolyzed protein. It is specially provided for offline channels with high cost performance (retail price of about 300 yuan). Jingai was out of stock in the first half of last year, and its sales volume is expected to rise when there are enough goods this year. Finally, the company actively used the surplus production capacity to negotiate OBM, ODM and OEM projects with key customers, boosting the further growth of revenue and profit.
The company is expected to revive. The company fell into adjustment previously, mainly due to the long-term absence of the founder, resulting in the lack of internal management, which is reflected in the problems at the channel end. Learn from the past, focus on product quality and cost performance; Shorten the channel chain at the channel end and strengthen the channel control through digital intelligence; The capacity side actively utilizes the surplus capacity and cooperates with various parties. In terms of industry, the number of newborns is impacted by the epidemic in the short term, but it is expected to recover in the medium term; The competition of high-end milk powder is fierce and the price of some competitors is chaotic; Domestic milk powder has an obvious upward trend, and the secondary registration of the new national standard will further eliminate small manufacturers. Based on the above factors, we believe that the company is expected to reverse from the bottom and return to the forefront of the industry.
Profit forecast and company rating: the downward space is limited, and the upward space can be expected. In 2022, the company will strengthen the basic market in traditional channels, push keruixin in direct supply channels, replenish Jingai in online channels, and harvest orders in key customer channels. The reversal trend is clear and the profit elasticity is large. We expect EPS to be 0.07/0.15/0.23 yuan from 2021 to 2023, with a growth rate of 125% / 105% / 49%. At present, the company’s share price and Pb are at the bottom of the historical range, with limited downward space. We maintain the target share price of 7.9 yuan and maintain the “buy” rating.
Risk factors: food safety problems and intensified industry competition.
