\u3000\u3 Bohai Water Industry Co.Ltd(000605) 338 Zhongyin Babi Food Co.Ltd(605338) )
Events
The company released its performance in 2021: in 2021, the company realized a revenue of 1.375 billion yuan (+ 41.06%), a net profit attributable to the parent company of 314 million yuan (+ 78.92%), and a net profit not attributable to the parent company of 152 million yuan (+ 18.01%).
Main contents
The net increase of franchise stores of the company reached a new high, and the group meal business grew rapidly
In terms of business income: in 2021, the sales of franchise stores / Direct stores / group meals of the company were 1.121 billion yuan (+ 42.28%) / 26 million yuan (+ 109.49%) / 215 million yuan (64.76%) / 13 million yuan (- 4.73%), accounting for 81.55% / 2.83% / 15.62% respectively, of which the franchise stores with high revenue accounted for steady growth; The group meal business with strong potential has achieved high income growth. The main reason is that “East China key customer business department” further defines the business positioning of key customers, further subdivides customers into group meal customers, catering supply chain customers, chain convenience store customers, chain catering customers and fresh e-commerce platform customers, and establishes corresponding sales teams for development; In terms of gross profit margin of business: in 2021, the gross profit margin of franchise store / direct store / group meal business of the company changed by – 2.25 / – 0.49 / – 1.73 / – 8.85 percentage points to 25.99% / 62.09% / 19.49% / 27.93% respectively compared with the same period last year, in which the revenue of single store of franchise store model increased by 23.11% to RMB 323900 / home compared with the same period last year (mainly because the revenue of single store in East China, which accounts for a relatively high proportion of revenue, recovered to the level in 2017), The single store revenue of Direct stores increased by 79.70% over the same period last year to 1306400 yuan / store.
The quantity and quality of stores in East China have increased, and the central China region has been expanded through mergers and acquisitions
In terms of regions, East China achieved 1.257 billion yuan in 2021, accounting for 91.47% of the main revenue, with a year-on-year increase of 41.74%, South China achieved 84 million yuan, with a year-on-year increase of 21.05%, and North China achieved 31 million yuan, with a year-on-year increase of 111.19%. Among them, the number of franchise stores in East China / South China / North China increased by 215 / 101 / 56 to 2950 / 370 / 141 respectively, with a total net increase of 372 to 3461 compared with last year. It is worth mentioning that the income of single stores in East China has recovered to the excellent level of 17 years, mainly because the company has promoted the income of stores by means of takeout development + expanding lunch and dinner + extending operation period + store upgrading: 1) among 3000 + stores in East China, 50% of stores have carried out takeout business, which has driven the income of single stores by about 6%; 2) The annual price adjustment has a pull of about 1% on income; 3) About 80% of the upgrading of the 3rd generation stores started in 17 years has been completed. Central China: the company has rapidly promoted the business layout of the company in the central China market through the acquisition of “Haolike” and “zaoyidian”, and the M & a project has been completed in March 2022.
Optimize the production capacity layout, and steadily improve the production capacity utilization of the three central factories
In 2021, the company’s capacity and capacity utilization rate increased steadily. Among them, the Shanghai phase II intelligent plant project in 2021 was officially put into operation in May 2021, which greatly alleviated the problem of capacity shortage. In 2021, the utilization rate of pastry capacity of central factories in Shanghai, Guangzhou and Tianjin were 91.62%, 27.45% and 7.24% respectively; The filling capacity utilization rates are 101.20%, 47.41% and 35.26% respectively. At present, the capacity in Shanghai is still in a tight balance. With the landing of Nanjing factory in 22 years, the market share of the company in East China is expected to further increase.
The profitability performance was stable, and the sales expenses increased significantly
In 2021, the gross profit margin / net profit margin of the company changed by – 2.2/4.81 percentage points to 25.70% / 22.77% compared with the same period last year. The main reasons for the decrease of gross profit margin compared with the same period last year are: 1) the pig price with high cost is high; 2) The decrease of state subsidies led to the increase of labor costs in the same period; 3) After the implementation of phase II of Songjiang plant, the production capacity is still in the climbing period, and there are depreciation expenses; 4) Compared with the same period last year, the expense rate increased by 0.60 percentage points to 10.42%, of which the sales expense rate increased by 1.67 percentage points to 6.58%, and the management expense rate decreased by 0.43 percentage points to 6.79%. In terms of cash flow, the company’s operating cash flow in 2021 was 159 million, a decrease of 91 million yuan compared with the same period last year.
Outlook 2022: a new chapter in the extended epitaxial spectrum, and the group meal is expected to continue its bright performance
New chapter of endogenous epitaxial spectrum, and the number of stores may exceed expectations. Extension in 2022 (the company will realize the national layout through accelerated acquisition, and 2022h1 company may merge the merger and acquisition project, which is expected to add more than 600 stores) + endogenous (under the background that the Nanjing factory will be launched in 2022, the East China region with strong brand strength will also accelerate the exhibition of stores, and the South China region will accelerate the development through increased public investment promotion) = it is expected to increase the net number of stores by more than 1300, So as to achieve the unexpected development in the number of stores.
The new volume of takeout business and the quality of stores exceeded expectations. Takeout business: the company has recently added takeout cooperation with meituan and other channels + the proportion of takeout stores continues to increase + many new Chinese and dinner products will contribute to the revenue of single store in 2022, which is sustainable; 2) Store upgrading, category expansion, regular price increase and other measures will continue; 3) 21 year price increase bonus release. Based on the above, we believe that the growth rate of single store revenue in 22 years is expected to remain positive and the development trend is getting better.
The development of group meal business has accelerated, and the performance may exceed expectations. We believe that the group meal business of the company will achieve more than expected development in 2022. The main reasons are as follows: 1) the accelerated landing of Nanjing factory is conducive to the expansion of group meal business in East China, and North China will continue to accelerate the development of group meal business; 2) In 2021, the company increased the staffing of key customer department, laying the foundation for the expansion of group meal business in 2022.
Strong cost control, and the gross profit margin may rebound at the bottom. Cost side: the cost side of the company is expected to be well controlled in 2022, mainly because the company has locked low-cost pork to ensure cost stability; Expense side: it is expected that the company’s expenses will remain stable as a whole in 2022.
Profit forecast and valuation
We believe that: 1) volume: the current expansion speed of the company’s franchise stores is basically in line with expectations. In the future, the company will accelerate the speed of mergers and acquisitions to achieve a rapid increase in scale; 2) Price: the company increases the income of a single store by making efforts to create revenue increment from store takeout business, adjusting store product structure and locking fresh clothes; 3) In terms of incremental business, under the trend of finished products and specialization, the company’s 2B business is expected to develop beyond expectations. To sum up, it is estimated that the company’s revenue growth rate from 2022 to 2024 will be 44%, 23% and 20% respectively; The growth rate of net profit attributable to the parent company was – 15.4%, 23.6% and 26.7% respectively; EPS is 1.1, 1.3 and 1.7 yuan / share; PE was 28, 22 and 18 times respectively. Considering the strong certainty of the company’s annual performance, the current valuation is very cost-effective, and the buy rating is maintained.
Risk warning: the second outbreak of the epidemic in China; Food safety issues; Franchise management risk; Failure risk of foreign investment; Raw material price fluctuation risk.
