\u3000\u3 China Vanke Co.Ltd(000002) 891 Yantai China Pet Foods Co.Ltd(002891) )
Event: the company released its annual report for 2021. During the reporting period, it achieved an operating revenue of 2.882 billion yuan, a year-on-year increase of 29.06%; The net profit attributable to the parent company was 116 million yuan, a year-on-year decrease of 14.29%. The operating revenue of 2021q4 alone was 869 million yuan, a year-on-year increase of 41.92%; The net profit attributable to the parent company was 24 million yuan, a year-on-year decrease of 38.14%.
The income side grew steadily, and the expansion of dry food has achieved results
The company achieved an operating revenue of 2.882 billion yuan in 2021, with a year-on-year growth rate of 29.06%. In terms of regions, the overseas market is still the main source of revenue and profit of the company. With the strong downstream demand and the continuous release of production capacity, the overseas revenue maintained a rapid growth. In 2021, the revenue reached 2.191 billion yuan, a year-on-year increase of 29.58%, accounting for 76.03%; China’s market revenue was 690 million yuan, a year-on-year increase of 27.44%. In terms of products, as the key category of the company in China, dry food has continued the high growth trend in 2020. In 2021, the revenue was 306 million yuan, with a year-on-year growth rate of 115.66%, and the business proportion increased from 6.36% in 2020 to 10.64% in 2021; Snacks reached 1.98 billion yuan, with a year-on-year growth rate of 15.64%, maintaining a steady growth under a high base; Wet grain realized an income of 475 million yuan, a year-on-year increase of 52.97%.
The drag of exchange rate factors led to the decline of gross profit margin and the continuous strengthening of internal management
In 21 years, the company’s overall gross profit margin was 20.05% (a year-on-year decrease of 4.65 PCT) and net profit margin was 4.39% (a year-on-year decrease of 2.39 PCT). We believe that due to the relatively high proportion of the company’s overseas income, the large appreciation of RMB in 21 years is the main reason that hinders the company’s profitability. From the expense side, the sales expense rate was 8.44% (with a year-on-year increase of 0.18pct), the management expense rate was 3.63% (with a year-on-year decrease of 0.37pct), and the financial expense rate was 0.84% (with a year-on-year decrease of 0.8pct). The company strengthened its sales efforts and optimized its management and financial expense control ability.
China’s market layout continues to advance, and the capacity of convertible bonds continues to expand. The long-term growth is worth looking forward to
The company continued to increase its investment in the Chinese market, with a compound growth rate of more than 40% in the past three years. We believe that the company has completed the stage of “from 0 to 1” in the Chinese market: 1) in terms of products, while maintaining the advantages in the field of wet grain and snacks, the company continues to increase the investment in the dry grain market. In 2021, the company acquired 50% equity of Hangzhou leading with its own funds and held 90% equity after the acquisition. Hangzhou is the leading new brand in China’s medium and high-end staple food. This acquisition has improved the construction of the group’s brand system and greatly assisted the group’s development strategy of focusing on dry food. 2) In terms of brand, with wanpy and zeal as the core and with the help of new media marketing means, continue to improve the brand strength and enhance customer stickiness; 3) In terms of channels, the company realizes Omni channel layout and focuses on online channels. 4) The production capacity layout is forward-looking, and the sales growth can be expected. In March 2022, the company plans to issue convertible bonds to raise no more than 769 million yuan, and the new production capacity includes 60000 tons of high-quality pet dry food, 40000 tons of new pet wet food and 2000 tons of freeze-dried pet food, so as to provide guarantee for the subsequent sales promotion. We are optimistic that the company will gradually grow into an industry leader through continuous category innovation, accurate marketing investment and perfect channel layout.
Profit forecast and investment suggestions: considering the continuous release of the company’s production capacity, increasing China’s marketing layout, exchange rate marketing and other factors, we adjusted the format of profit forecast. It is estimated that the operating revenue of the company from 2022 to 2024 will be 3.553/43.79/5.432 billion yuan (the previous value is 3.531/4.276 billion yuan from 2022 to 2023), with a year-on-year increase of 23.28% / 23.28% / 24.05%; The net profit was 172 / 254 / 331 million yuan (the previous value was 207 / 301 million yuan from 2022 to 2023), a year-on-year increase of 48.44% / 48.14% / 30.33%, EPS was 0.58/0.86/1.13 yuan respectively, and the corresponding PE was 36 / 24 / 18 times respectively, maintaining the “buy” rating.
Risk warning: there is uncertainty in the implementation progress and effect of the raised investment project; The company’s export business has exchange rate change risk and legal risk; Risk of performance not reaching the expected target after the acquisition
