\u3000\u3 Shengda Resources Co.Ltd(000603) 317 Sichuan Teway Food Group Co.Ltd(603317) )
Event:
Sichuan Teway Food Group Co.Ltd(603317) released the annual report for 21 years. The annual revenue was RMB 2.025 billion, with a year-on-year increase of – 14.34%, the net profit attributable to the parent company was RMB 185 million, with a year-on-year increase of – 49.32%, and the non net profit attributable to the parent company was RMB 122 million, with a year-on-year increase of – 60.53%. Among them, Q4 achieved a revenue of 628 million yuan, a year-on-year increase of – 25.22%, a net profit attributable to the parent of 104 million yuan, a year-on-year increase of + 137%, and a non net profit attributable to the parent of 58.32 million yuan, a year-on-year increase of + 348%. The company has set a 22-year revenue target of + 15% year-on-year and net profit of + 30%.
Comments:
Income analysis: weak consumption + change of strategy, temporary decline in income. In 2021, the company achieved a revenue of 2.025 billion yuan, a year-on-year increase of – 14.34% (Q1: + 56.21%; Q2: – 15.41%; Q3: – 37.12%; Q4: – 25.22%). Since Q2, the company’s revenue has continued to decline, which is mainly related to the sluggish consumption and the change of the company’s strategy. Since 21h2, the company’s strategy has gradually shifted from achieving the sales target to focusing on the freshness of product date and the health of channel inventory. 1) Category: hot pot seasoning achieved a revenue of 875 million yuan (year-on-year – 28%), Sichuan seasoning 849 million yuan (year-on-year – 10%), and winter seasoning 212 million yuan (year-on-year + 112%); 2) By channel: 1.566 billion yuan (year-on-year – 21.7%) for dealers, 253 million yuan (year-on-year + 56%) for customized meals and 157 million yuan (year-on-year + 1%) for e-commerce; 3) By market: the southwest market, central China market and East China market of the company’s headquarters performed slightly better than the revenue growth, while the growth rate of Northwest market and North China market fell by more than 20%. 4) Dealers: 408 dealers were added in the whole year, including the net increase of dealers in the first three quarters and the significant decrease of Q4 dealers.
Profit analysis: the pressure of promotion and cost increases, and the profit performance of the whole year is not optimistic. In 2021, the net profit attributable to the parent company was 185 million yuan, with a year-on-year increase of – 49.32% (Q1: + 4.13%; Q2: – 104%; Q3: – 96.25%; Q4: + 137%). The gross profit margin in the year of 21 was 32.22%, with a year-on-year increase of -9.27pct. On the one hand, due to the impact of the change of accounting standards, the promotion rebate is no longer included in the expenses and directly offset the income. At the same time, the company realizes the inventory elimination through promotion throughout the year, which has a great impact on the gross profit margin. On the other hand, the cost of raw materials is rising, which has a certain impact on the gross profit margin. The gross sales difference of the company in the whole year was 12.75%, with a year-on-year increase of -8.69pct, which is mainly related to the gross profit margin. two
2-year Outlook: inventory clearing meets the turning point, and the second recovery is waiting for flowers to bloom. 1) Revenue: on the one hand, according to the research of channels, terminals and companies, we believe that the company’s de inventory action has ended, and the strategic focus is more focused on date freshness and inventory health. In the future, the company’s channels are expected to enter a virtuous circle; On the other hand, consumption is expected to stabilize gradually in the future. Under the triple action of low inventory, stable consumption and low base, the company’s revenue is expected to gradually return to the fast lane of growth. 2) Profit: in the future, with the gradual emergence of scale advantages, the fixed type expense rate is expected to gradually decline, and the profit elasticity can be expected under the low base. However, considering that the cost pressure is significantly higher than that in 20 years, we expect that it will be difficult for the profit to return to the 20-year level. However, it is not difficult to achieve the company’s target of 15% / 30% revenue / profit.
Future outlook: the industry will accelerate the liquidation, the leading enterprises are expected to benefit, and equity incentive will enable them. The future market space of the compound condiment industry is huge. At present, it is still in the early stage of industry development, and there are many participants in the category. In the past 21 years, due to the impact of sluggish demand in the consumer industry and community group purchase, compound condiment enterprises have also experienced a wave of clearing, and small enterprises have withdrawn passively. Enterprises with financial strength, product strength and brand strength, such as Tianwei and Yihai, are expected to benefit from it. At the same time, the equity incentive of the company is expected to be implemented in 22 years, so as to ensure the competition of enterprises and the high-speed and high-quality development of enterprises in terms of mechanism.
Profit forecast and rating: the company is in the golden period of compound condiment development, and the track is excellent. After 21 years of industry development difficulties, the industry liquidation has accelerated. We are optimistic about the company’s core competitiveness and development potential. In the short term, with the end of channel liquidation, consumption has gradually stabilized, superimposed with 21 years of low base, the company is expected to usher in a wave of high-quality growth, and equity incentive has locked the bottom line of revenue growth. Without considering the equity incentive expenses, we expect the company’s revenue growth rate to be 21%, 23% and 20% respectively from 2022 to 2024, and the profit growth rate to be 41%, 29% and 21% respectively, corresponding to EPS of 0.34 yuan, 0.45 yuan and 0.54 yuan respectively. We give a 65x valuation according to the performance in 2022, with a one-year target price of 22 yuan, and maintain the “overweight” rating of the company.
Risk warning: price fluctuation of raw materials; Deterioration of sales environment; The cost of raw materials is rising rapidly; Food safety issues.
