\u3000\u3 Shengda Resources Co.Ltd(000603) 288 Foshan Haitian Flavouring And Food Company Ltd(603288) )
The overall performance in 2021 is in line with expectations; In 2021, the company achieved an annual operating revenue of 25 billion yuan, with a year-on-year increase of + 9.7%. Under the severe external competitive environment, the company achieved a steady growth in sales, of which Q4 achieved a revenue of 7.01 billion yuan, with a year-on-year increase of + 22.9%. The growth rate was further improved month on month, mainly due to the dealers’ active increase in goods preparation after the price increase of the company’s products was announced; The company achieved a net profit attributable to the parent company of 6.67 billion yuan, a year-on-year increase of + 4.2%, and the overall performance was in line with expectations.
Steady growth was achieved in the whole category and steady progress was made in channel expansion: according to products, the company’s revenue of soy sauce / seasoning sauce / oyster sauce / others during the period was 14.19/26.7/45.3/2.21 billion yuan respectively, with a year-on-year increase of + 8.8% / + 5.6% / + 10.2% / + 13.4%. All categories of products maintained stable growth, highlighting the demand toughness of the company’s products in the consumer market. Among them, (1) high-end soy sauce products achieved a leading scale and further widened the gap with the industry; (2) When the consumption scene of the national catering industry is suppressed, the promotion pace of the company’s oyster sauce products “from catering to residents and coastal to the whole country” has achieved remarkable results; (3) Among other products, the annual revenue of vinegar and wine reached 1.2 billion and has begun to take shape. It is expected to form a new business growth point of the company in the future. In terms of channels, the company actively arranged channel expansion, with a net increase of 379 to 7430 dealers during the period, accelerating the improvement of market and network coverage. In terms of subregions, the Eastern / Southern / central / northern / Western achieved 48.2/44.7/53.1/60.6/2.94 billion yuan respectively, with a year-on-year increase of + 7.5% / + 8.4% / + 14.0% / + 6.7% / + 9.3%. In addition, during the period, the company accelerated the layout and development of new retail channels. While ensuring the stable growth of offline regional markets, it strengthened in-depth cooperation with multiple head community group purchase and e-commerce platforms, and the sales revenue of online channels successfully recorded 7.5% The breakthrough of 0.0 billion yuan (year-on-year + 85.2%) has diversified channels and achieved coordinated development.
The short-term cost pressure continued to be under pressure, and a number of measures were taken to maintain the steady development of profits: in 2021, the industry was facing the pressure of large-scale rise in raw materials. The company achieved a gross profit margin of 38.7% in the whole year, down 3.5pct year-on-year. During the period, the company’s management expense ratio and R & D expense ratio were 1.6% / 3.1% respectively, which remained the same as the same period of the previous year, and the sales expense ratio contracted by 0.6pct to 5.4% year-on-year. The company’s overall operating expenses were well controlled to offset the profit pressure caused by the rise of some costs. The company achieved a net interest rate of 26.7% in the whole year, a year-on-year decrease of 1.4pct. Looking ahead to this year, due to the continuous impact of global economic environment and geopolitical factors, we expect the cost of bulk raw materials to continue to rise in 2022. However, considering that the company has implemented price increase at the end of last year and has successfully realized market price transmission so far, it is expected that the cost pressure of this year will be relieved to a certain extent. We expect that the company will continue to optimize the product structure and take a number of cost reduction and fee control measures to achieve a relatively stable development of the annual operating profit margin.
Target price 102.37 yuan, buy rating: considering the recent complex and volatile global economic environment and the continuous and repeated epidemic in China, the cost side and demand side of the industry may face large variables, so we lowered the company’s 2022 profit forecast and short-term target price to reflect the uncertainty of the future business environment. However, we believe that under the further impact of the external environment, the market share of the industry may accelerate to the top enterprises, and the company is also expected to achieve a steady improvement in future performance by virtue of its leading comprehensive competitive strength. It is expected to achieve a net profit of RMB 74.7/89.5/10.73 billion from 2022 to 2024, with a target price of RMB 102.37, equivalent to 53 times of PE in the profit forecast of fiscal year 23, and maintain the buy rating.
Important risks: 1) cost rise exceeds expectations; 2) Food safety; 3) The epidemic development exceeded expectations.
