\u3000\u3 China Vanke Co.Ltd(000002) 891 Yantai China Pet Foods Co.Ltd(002891) )
On March 30, the company released its annual report. In 21 years, the company achieved a revenue of 2.88 billion yuan, a year-on-year increase of 29.1%, and the net profit attributable to the parent company was 116 million yuan, a year-on-year increase of - 14.3%. Among them, 4q achieved a revenue of 870 million yuan, a year-on-year increase of + 41.9%, and the net profit attributable to the parent company was 24 million yuan, a year-on-year increase of - 38.1%. The performance was slightly lower than the market expectation.
Business analysis
Overseas steady growth, China's staple food growth eye-catching. From the perspective of business, the revenue of pet snacks / cans / staple food in 21 years was RMB 1.98/4.8/310 billion, with a year-on-year increase of + 15.6% / + 53% / + 115.7%, mainly benefiting from the continuous climbing of wet grain production capacity and the rapid development of dry grain business. Geographically, the overseas / domestic revenue was 2.19 billion yuan, a year-on-year increase of + 27.7% / + 28.1%. Affected by the sluggish consumption environment in the second half of the year, China maintained a rapid growth (expected + 50%), and the high-end brand zeal was slightly dragged down by the depopulation of inventory.
The rise of exchange rate, cost and increased marketing investment have led to short-term pressure on profitability. The overall gross profit margin in the 21st year was 20.1% (- 4.7pct), of which the gross profit margin of 4q was 19.0% (year-on-year - 3.4pct, basically the same month on month), the gross profit margin of overseas / domestic business was 18.1% / 28.2%, year-on-year - 3.9 / - 6.4pct, of which the gross profit margin of 2h21 overseas / domestic business was 17% / 27.2%, month on month - 2.5 / - 2.2pct. The main reasons are as follows: ① the appreciation of RMB dragged down; ② China's energy and Shenzhen Agricultural Products Group Co.Ltd(000061) costs are rising, raising the cost pressure; ③ The orders of dry grain business grew rapidly, and some orders were outsourced, which structurally affected the gross profit margin. In terms of expense ratio, the company increased the marketing expenses of brands such as zeal. In the past 21 years, the sales / Management & R & D / financial expense ratio was 8.4% / 5.1% / 0.8%, year-on-year + 0.2 / - 0.5 / - 0.8pct, and the net interest rate was 4.39%, year-on-year -2.4pct. Among them, the 4Q sales / Management & R & D / financial expense ratio was 10.1% / 5.2% / 1.3%, year-on-year + 5.6 / - 2.4 / - 0.5pct.
The plan for convertible bonds was released, and China's category development driven growth accelerated. For overseas business, it is expected that the short-term exchange rate will weaken the suppression of profits; In terms of China business, the launch of new wet grain cans in November 21 is expected to drive zeal back to growth. The company has issued a RMB 770 million convertible bond plan for the further layout of China's dry grain and wet grain projects. With the forward-looking layout of the supply chain, Chinese brands have gradually built a full category combination of snacks, wet grain and dry grain. In the medium term, we expect the growth of Chinese independent brands to accelerate.
Profit forecast and investment suggestions
Considering the subsequent production capacity launch, we keep the profit forecast of 22-23 unchanged. The EPS of the company is expected to be 0.69 and 0.86 yuan in 22-23 years and 1.03 yuan in 24 years. The current share price corresponds to 31, 24 and 20 times of PE in 22-24 years respectively. Considering the forward-looking and prominent advantages of the company's production capacity and category strategy layout in China, China's growth path is clear, the valuation has fallen to a historically low level, and it has been raised to the "buy" rating.
Risk tips
Risks of intensified industry competition; Risk of exchange rate fluctuation; The construction of independent brand is less than expected; The performance is lower than expected due to excessive investment of expenses; The risk of goodwill impairment.
