\u3000\u3 China Vanke Co.Ltd(000002) 891 Yantai China Pet Foods Co.Ltd(002891) )
In 2021, the company realized a net profit attributable to the parent company of 116 million yuan, a year-on-year decrease of 14.3%.
The company released an annual report: in 2021, it achieved a revenue of 2.882 billion yuan, a year-on-year increase of 29.1%; The net profit attributable to the parent company was 116 million yuan, a year-on-year decrease of 14.3%; The net profit attributable to the parent company after deduction was 114 million yuan, a year-on-year decrease of 9.4%. Quarterly, Q1-Q4 revenue in 2021 was 560 million yuan, 697 million yuan, 755 million yuan and 870 million yuan respectively, and the net profit attributable to the parent was 21 million yuan, 40 million yuan, 31 million yuan and 24 million yuan respectively.
Overseas revenue increased by 27.7% year-on-year, and the proportion of revenue remained at 75.3%.
The company's revenue and profits mainly come from overseas markets. From 2013 to 2020, the company's overseas revenue rose sharply from 459 million yuan to 1.641 billion yuan, with a compound annual growth rate of 20%. In 2021, the company achieved an overseas revenue of 2.097 billion yuan, a year-on-year increase of 27.7%, and the overseas revenue maintained rapid growth. In 2021, the company's overseas revenue accounted for 75.3% of its main business revenue, which was the same as that in 2020; The gross profit of overseas business was 380 million yuan, a year-on-year increase of 5.2%, accounting for 66.2% of the profit of main business, an increase of 0.2 percentage points over 2020. The company's products are sold to the United States, the European Union, Japan and other countries and regions. The main customers are pet food dealers with local brands, and the income of the top five customers accounts for nearly 50%. The company's testing center is the only pet food and feed production enterprise laboratory recognized by CNAs in the world, which can meet the basic requirements of different importing countries on the quality and safety of pet food. The company has achieved zero mistakes in history by strictly controlling the product quality.
Wanpy's revenue increased by 50%, and the investment of sales expenses in the downturn of the industry remained unchanged.
In 2021, the company achieved business income of RMB 689 million in China, with a year-on-year increase of 28.1%, accounting for 24.7% of the main business income. In terms of brand operation, the company implements the brand strategy with "wanpy naughty" and "zeal Zhenzhi" as the core, and caters to the needs of various market segments through different brand positioning. In September 2021, the company acquired 50% of the leading equity in Hangzhou and now holds 90% of the leading equity in Hangzhou, which will also help develop the leading market. In 2021, the company's wanpy brand revenue increased by 50% year-on-year, continuing the high growth in recent years. Affected by the adjustment of product structure, the revenue of zeal brand is basically the same as that in 2020. In order to further open the Chinese market, the proportion of the company's sales expenses, sales expense ratio, promotion expenses and promotion expenses has been at the highest level among listed and proposed pet companies for many years. The sales expenses in 2021 were 243 million yuan, a year-on-year increase of 31.9%, of which the business publicity expenses and sales service expenses were 162 million yuan, a year-on-year increase of 39.3%, and continued to work intensively in the relative downturn of the industry.
Pet dry food revenue increased by 115.7% year-on-year, and various factors dragged down the gross profit margin of various categories
By category, in 2021, the company achieved pet snack income of 1.98 billion yuan, a year-on-year increase of 15.6%, pet canned income of 475 million yuan, a year-on-year increase of 53.0%, and pet dry food of 306 million yuan, a year-on-year increase of 115.7%. Affected by exchange rate fluctuations, price fluctuations of raw materials, promotion and promotion of new products and other factors, the company's gross profit margin of pet snacks will increase from 24.2% in 2020 to 19.8% in 2021, the gross profit margin of pet cans will decrease from 27.1% to 24.6%, and the gross profit margin of pet dry food will decrease significantly from 33.3% to 18.9%. In 2021, the company's gross profit of pet snacks, cans and dry food will be 392 million yuan, 117 million yuan and 58 million yuan respectively, with a year-on-year increase of - 5.5%, 38.9% and 22.4% respectively. Through IPO, issuance of convertible bonds and additional issuance, the company raised funds and investment projects have been put into operation successively. It is expected to realize the production capacity of more than 20000 tons of pet snacks, 60000 tons of pet cans and 70000 tons of pet dry food. It is worth looking forward to the rapid growth of sales in the future.
Investment advice
The company has made great efforts to develop its own brands and business in China. During the downturn of the industry, the investment of sales expenses has not decreased. It is the leader in China's pet food industry. We expect that from 2022 to 2024, the company's main business income will reach 3.877 billion yuan, 4.856 billion yuan and 5.961 billion yuan, with a year-on-year increase of 34.5%, 25.3% and 22.7%, corresponding to the net profit attributable to the parent company of 183 million yuan, 274 million yuan and 386 million yuan, with a year-on-year increase of 58.6%, 49.2% and 41.2%, corresponding to eps0.01% 62 yuan, 0.93 yuan, 1.31 yuan.
The company started with overseas OEM. In recent years, it has built its own brand and expanded its business in China. It has formed a two-line parallel mode of business in China and abroad. As the Chinese business is in a period of rapid growth and the foreign business is in a period of stable growth, we adopt the segment valuation method, the PE valuation method for overseas business and the PS valuation method for Chinese business. We give the company 20 times PE for overseas business in 2022, corresponding to a market value of 4 billion yuan; Give 5 times PS to Chinese business, corresponding to a market value of 4.845 billion yuan. To sum up, the target market value of the company in 2022 is RMB 8.845 billion, corresponding to the target price of RMB 30.1, and the "buy" rating remains unchanged.
Risk tips
Exchange rate fluctuation risk; China's market development did not meet expectations; The production capacity is lower than expected; Price fluctuation of raw materials; Pet food safety issues; Core customers account for a large proportion; Brand building is less than expected.
