\u3000\u3 Shengda Resources Co.Ltd(000603) 317 Sichuan Teway Food Group Co.Ltd(603317) )
The net profit of the parent company was RMB 14.0 billion on March 1, 2023 and RMB 2.6 billion on January 1, 2023, respectively.
Revenue is under pressure in 2021, and the bottom of 21q4 is improved. In 2021, the revenue was 2.026 billion yuan, a year-on-year increase of - 14.3%, which was in line with the previous performance express; 21q4 achieved a revenue of 628 million yuan, a year-on-year decrease of - 25.2%, which was mainly due to the recovery of macro demand and the slowdown of industry competition margin. At the same time, the revenue of 21q4 sausage and bacon seasoning was + 50% year-on-year, which had an obvious pulling effect on the revenue. In terms of products, the revenue of hot pot seasoning / Chinese compound seasoning / chicken essence / spicy sauce in 2021 was - 28% / - 10% / - 22% / - 6% year-on-year respectively. The decline of core products was mainly impacted by terminal dynamic sales, channel adjustment and new taste. The revenue of sausage and bacon seasoning was + 112% year-on-year, mainly due to the decline of pork price. In terms of subregions, in 2021, the revenue of Southwest / central / East China was - 11% / - 12% / - 13% year-on-year, and the performance of key markets was better than that of the whole. The revenue of Northwest / North / Northeast / South China was - 14% / - 21% / - 29% / - 20% year-on-year, and the performance of emerging markets was weaker than that of the whole. In terms of channels, customized meal adjustment performed well. In 2021, the revenue was 250 million yuan (accounting for 13%), with a year-on-year increase of + 56%. In addition, the distribution channels continued to adjust. At the end of 2021, there were 3409 dealers, with a year-on-year increase of + 14% and a month-on-month increase of - 4%. The core market continued to encrypt the channel network. At the same time, although the income end of emerging markets was adjusted in the short term, the channel expansion trend was still in progress.
Cost pressure and expense investment put pressure on the annual performance, but 21h2 profit improved quarter by quarter. Gross profit margin: it was 32.2% in 2021, with a year-on-year rate of - 9.3pct, and - 6.6pct year-on-year after excluding freight adjustment factors, which was mainly due to cost pressure and the company's increase in promotional discounts. Although the company raised the price of a few products in November, it was difficult to fully hedge. Expense rate: in 2021, the sales expense rate was 19.5%, with a year-on-year rate of -0.6pct, and a year-on-year rate of + 2.1pct after excluding the freight adjustment factor, mainly because the company still increased the cost offline to release the inventory. Net interest rate: it was 9.1% in 2021, with a year-on-year increase of - 6.3pct, mainly squeezed by costs and expenses. 21q4 was 16.6%, with a year-on-year increase of + 11.3pct, and the bottom improved significantly.
Outlook: the trend of multiple factors is good, and it will return to steady growth in 2022. 1) The terminal demand was repaired steadily and the company's channel inventory remained low; 2) The adjustment of internal product cycle and organizational structure is coming to an end; 3) The cost may drop gradually at a high level of 22h2, and the price increase effect is expected to be fully released; 4) The base is low, leaving room for growth. To sum up, we believe that the continuous improvement of the company's fundamentals in 2022 is a high probability event.
Investment suggestion: it is estimated that the net profit attributable to the parent company from 2022 to 2024 will be RMB 275 / 352 / 430 million, with a year-on-year increase of + 48.8% / 28.3% / 22.2%. The corresponding PE of the stock price is 49 / 38 / 31x. The PE of the company in 2022 is higher than the average level of the condiment industry by 40x (wind unanimously expected). It is covered for the first time and rated as "prudent recommendation".
Risk tips: the terminal dynamic sales are less than expected, the cost investment is more than expected, food safety problems, etc.
