\u3000\u3 Shengda Resources Co.Ltd(000603) 317 Sichuan Teway Food Group Co.Ltd(603317) )
Key investment points
Event: the company achieved revenue of RMB 2.026 billion in 2021, with a year-on-year increase of – 14.34%; The net profit attributable to the parent company was 185 million yuan, a year-on-year increase of – 49.32%; The net profit attributable to the parent company after non deduction was 122 million yuan, a year-on-year increase of – 60.53%. Among them, the revenue of 2021q4 was 628 million yuan, a year-on-year increase of – 25.22%; The net profit attributable to the parent company was 104 million yuan, a year-on-year increase of 136.78%; The net profit attributable to the parent company after non deduction was 58 million yuan, with a year-on-year increase of 347.78%.
In 2021q4, the revenue declined, and the inventory was benign, which was favorable for the growth in the coming year. The main business income of 2021q4 company decreased by 25.19% year-on-year, mainly due to the healthy development of benign inventory after digesting the channel inventory in the first three quarters, which was significantly reduced compared with the peak season in previous years. On the one hand, by the end of 2021, the company’s inventory of hot pot seasoning and Chinese dish seasoning was – 82.69% and – 47.60% respectively year-on-year; On the other hand, according to the channel research feedback, the channel inventory remained benign at the end of 2021, lower than that in the same period of previous years. Improving product freshness and maintaining healthy inventory are conducive to medium and long-term development. The company is expected to achieve benign growth in 2022. In terms of products, the income of 2021q4 hot pot seasoning, Chinese dish seasoning and vinegar bacon seasoning was 288 million yuan, 155 million yuan and 148 million yuan respectively, with a year-on-year increase of – 41.46%, – 32.17% and 50.50% respectively. In terms of channels, dealers, customized catering and e-commerce channels in 2021q4 achieved revenue of 456 million yuan, 77 million yuan and 73 million yuan respectively, with a year-on-year increase of – 33.81%, 5.72% and 15.61% respectively. Compared with the peak season in previous years, the pressure of dealers at the end of the year decreased. By region, the income of southwest, central, East, northwest, north, northeast and South China increased by – 15.88%, 0.71%, 74.74%, 45.92%, 14.81%, 14.92% and 31.23% respectively in 2021q4. The sharp decline in some regions was mainly affected by the repeated epidemic situation in some markets. 2021q4 company has a net decrease of 154 to 3409 dealers, mainly due to the company’s optimization of dealers.
Gross profit margin improved month on month + sales expense rate decreased, and Q4 profitability improved significantly. Under comparable standards, the gross profit margin of 2021q4 company decreased by 2.02 PCT year-on-year to 36.79%, which was significantly narrowed compared with the decrease of 8.90 PCT in the first three quarters, mainly due to: (1) after clearing the inventory in the first three quarters, the complimentary promotion decreased significantly in the fourth quarter; (2) The price increase of some products also contributes to the increment; (3) Internal adjustment of the company to ease the pressure of rising costs. 2021q4 company’s sales (comparable caliber), management, R & D and financial expense rates were – 9.29, + 1.89, + 0.21 and – 0.10 PCT respectively to 19.50%, 7.10%, 1.16% and – 0.79% year-on-year. The sharp decline in sales expense rate is mainly due to the decrease in advertising and other investment, and the increase in management expense rate is mainly due to the large decline in revenue. Overall, the net profit margin of 2021q4 sales increased by 11.36 PCT to 16.61% year-on-year.
Fundamentals bottomed out in 2021 and are expected to rebound in 2022. In 2021, the company faced multiple pressures, with both revenue and profit declining. After adjustment, the company will go into battle light in 2022 and is expected to enter a benign growth stage. The company has launched a new round of equity incentive scheme with more pragmatic objectives, which is expected to boost the confidence of the team and stimulate the enthusiasm of employees. At the same time, after the fierce competition in 2021, the industry is expected to gradually enter the reshuffle stage in 2022, and the withdrawal of leading basic condiments and regional brands is accelerated, which is conducive to the development of leading companies.
Profit forecast: according to the annual report and business plan of 2021, we adjusted the profit forecast. It is estimated that the company’s revenue from 2022 to 2024 will be 2.467 billion yuan, 2.945 billion yuan and 3.457 billion yuan respectively, the net profit attributable to the parent company will be 255 million yuan, 384 million yuan and 513 million yuan respectively (the original forecast value from 2022 to 2023 is 311 million yuan and 421 million yuan), and the EPS will be 0.34, 0.51 and 0.68 yuan respectively, corresponding to 52 times, 35 times and 26 times of PE, maintaining the “overweight” rating.
Risk warning events: repeated global epidemics and slowdown of global economic growth; Food safety risks; Decline in sales due to irresistible factors; The deterioration of market competition has brought unexpected promotional activities
