\u3000\u3 Shengda Resources Co.Ltd(000603) 886 Ganso Co.Ltd(603886) )
Event:
The company released its 2021 annual report. The annual operating revenue was 2.584 billion yuan, with a year-on-year increase of 12.20%. The net profit attributable to the parent company was 340 million yuan, with a year-on-year increase of 13.27%. The deduction of non net profit was 296 million yuan, with a year-on-year increase of 11.32%. The EPS was 1.42 yuan / share, and it was proposed to distribute 10 yuan (including tax) for every 10 shares. Key investment points:
Steady growth throughout the year and a smooth ending in 2021. The company’s Q4 single quarter revenue was 500 million yuan, a year-on-year increase of + 13.79%, and the net profit attributable to the parent company was 08 million yuan, a year-on-year increase of + 8.10%. Q4’s revenue increased rapidly, mainly due to the accelerated growth of cake categories and the continuous increase in the proportion of small-size cakes. After entering the Q4 off-season, the company still achieved stable growth, and successfully completed the 8-10% revenue target planned by the company at the beginning of the year.
The cake category continued to grow steadily, and the online business performed well. By category, Q4 cake, Chinese and Western pastries, fruits and other products achieved a year-on-year revenue of + 27.0%, – 4.8%, – 98.9% and 26.5% respectively. Among them, the annual revenue of cake business was 952 million, with a year-on-year increase of 28.09%. Q4 continued to maintain a steady growth trend. In 2021, the company focused on cake business, repositioned cake categories and targeted marketing promotion. Secondly, the company’s freight free home delivery service also promoted the growth of cake orders. In 2021, the company will continue to promote the Wuxi Online Offline Communication Information Technology Co.Ltd(300959) integrated operation layout, complete the closed-loop sales by relying on the stores offline, and synchronously transform the online guidance into private traffic, increase the incentives for the store personnel, and effectively drive the enthusiasm of the store personnel for drainage promotion. At the same time, the company introduced the home distribution system online to improve consumers’ sense of experience and help the all-round development of new retail business. As a result, Q4 online achieved a revenue of 237 million yuan, a year-on-year increase of 54.0%. As the turnover generated by scanning the QR code of stores offline is also included in the online, the revenue performance of the offline report end decreases. The revenue of Q4 offline is 220 million yuan, a year-on-year decrease of 9.8%.
The gross profit margin of the whole year is affected by the rising cost, the product structure changes steadily, and the gross profit margin changes. The company’s annual gross profit margin was 62.12%, down 3.48 PCT year-on-year. This year, the price of oil, the main raw material of cake, continued to rise, and the cost of cake raw materials increased by 47.7%, which greatly affected the gross profit margin. At the same time, due to the increase in the proportion of online sales, the company’s distribution fees and e-commerce promotion expenses have increased. However, the proportion of the company’s high gross profit cake continues to rise, which has made a great contribution to maintaining a relatively stable gross profit margin. In February this year, the company raised the price of cakes and other products in view of the rising cost of raw materials, but considering the problem of market competition, the price increase was controlled within 10%. In addition, the net cash received from Q4 sales and operating cash flow in 2021 was 730 million / – 177 million, with a year-on-year increase of – 9.88% / – 12.32%. The contract liabilities decreased by 78 million yuan to 773 million yuan month on month, mainly due to the earlier time point of the mid autumn Festival peak season this year and the earlier withdrawal date of cards and bonds.
Profit forecast and valuation. Due to seasonal factors, the company’s quarterly performance fluctuates significantly, and there are few comparable companies, and the market attention is not high. However, since its listing in 2016, the company has experienced the test of epidemic and online transformation, with steady growth in performance, good cash flow and high dividend ratio. The dividend payment rate from 2019 to 2021 was 116.2%, 80.0% and 70.7% respectively, and the valuation has room for repair. We expect that the company’s EPS from 2022 to 2024 will be 1.60/1.84/2.07 yuan respectively, and the corresponding valuations will be 11 / 10 / 9 times respectively. It will be rated as “overweight” for the first time.
Risk tips: 1) food safety issues; 2) The opening of stores did not meet expectations, and the efficiency growth of single stores was not obvious; 3) Competition intensifies and the discount of card and coupon increases, resulting in the increase of expense rate; 4) The seasonal fluctuation of card and coupon collection gift box is still relatively fierce, resulting in large fluctuations in the market expectation in a short time; 5) Online growth slowed.
