\u3000\u3 Bohai Water Industry Co.Ltd(000605) 338 Zhongyin Babi Food Co.Ltd(605338) )
Event: in 2021, the company achieved a revenue of 1.375 billion yuan, a year-on-year increase of + 41.06%,; The net profit was 314 million yuan, a year-on-year increase of + 78.92%. The profit and loss from changes in fair value of the company increased significantly to 196 million yuan, which was mainly contributed by the changes in the fair value of Eastroc Beverage (Group) Co.Ltd(605499) equity held by the company. The company deducted 152 million yuan of non attributable net profit, a year-on-year increase of + 18.01%. In the single quarter of 2021q4, the company achieved an operating revenue of 402 million yuan, a year-on-year increase of + 25.99%, and a net profit attributable to the parent company of 88 million yuan, a year-on-year increase of + 21.54%, deducting a net profit not attributable to the parent company of 51 million yuan, a year-on-year increase of + 17.5%. The company plans to distribute a cash dividend of 2.6 yuan (including tax) for every 10 shares.
Multiple strategies have achieved remarkable results in improving the income level of single stores, and franchise stores have expanded rapidly. In 2021, the company’s operating revenue was 1.375 billion yuan, an increase of 41.06% over the same period last year, including 1.121 billion yuan from franchise business, a year-on-year increase of + 37.93%, 215 million yuan from group meal business, a year-on-year increase of + 61.21%, and 26 million yuan from direct stores, a year-on-year increase of + 106.77%. In the 21st year, the company’s franchisee’s single store revenue was 3.239 billion yuan, a year-on-year increase of + 23%, reversing the downward trend since 18 years and exceeding the 19-year level. The single store revenue in East China, the company’s key region, has exceeded the level in 2017. The increase of single store income proves that in the past 21 years, the company has achieved good results by increasing the operation of online business, improving the image of stores, strengthening the research and development of products suitable for local tastes and expanding the categories of lunch and dinner. On the basis of the growth of single store income, the company increased investment attraction and the rapid expansion of franchise stores. In 2021, the company increased 372 to 3461 franchise stores, an increase of 12% over the end of last year, the fastest growth in recent six years, including 215 / 101 / 56 in East / South / North China, an increase of 8% / 38% / 66% over the end of last year. According to our calculation, the company still has about 50% of the opening space in Shanghai and about twice the opening space in Jiangsu and Zhejiang. We estimate that the company still has an average of 1.8 times the opening space in the existing store area, and the number of stores can reach 8000. If we include densely populated areas such as central China, Anhui, Hebei and Shandong, there will be tens of thousands of stores in the future.
The group meal business is expected to maintain a high growth in the next few years. The group meal business income of the company was 215 million yuan, a year-on-year increase of + 61.21%. In the year of 21, the company further subdivided the group meal business market and sales channels, subdivided customers into group meal customers, catering supply chain customers, chain convenience store customers, chain catering customers and fresh e-commerce platform customers, and established corresponding sales teams for development. At present, the company’s group meal business is still dominated by group meal customers and catering supply chain customers. In the future, it will make synchronous efforts in convenience stores, chain catering and fresh e-commerce platforms. China’s group meal industry is still in the stage of rapid development. From 2016 to 2020, the compound growth rate of the total scale of China’s group meal market reached 13.6%, which is higher than the overall growth rate of the catering industry, while the industry concentration is very low. In 2020, the market share of China’s top 100 group meal enterprises was only 6.7%, far lower than the level of 80% in the United States and 60% in Japan / South Korea. At present, with the rapid development of cold chain logistics, the progress of catering equipment technology, the enhancement of consumer brand awareness and the improvement of product quality demand, the group meal industry will be further developed. Leading enterprises have great advantages in capital, technology and supply chain, and the industry concentration is expected to be significantly improved. The company has strong brand advantages in East China, and has the advantages of product type, product quality and service. The proportion in the field of group meals is still very low, and it is expected to maintain a high growth in the next few years. Q4 gross profit margin rebounded. In the long run, the gross profit margin and sales expense rate will remain stable and slightly decline. The gross profit margin of the company in 2021 was 25.66%, with a year-on-year increase of -2.2pct, which was mainly affected by the high price of pork in the first half of the year and the insufficient capacity utilization in the early stage of Songjiang phase II plant. In the second half of the year, the pork price fell, the capacity utilization rate of Q4 company’s new factory increased rapidly, and the factors of high revenue innovation in Q4 single quarter jointly promoted the gross profit margin of Q4 single quarter to rise to 28.14%, with a year-on-year increase of + 8.4pct. The sales expense rate of the company in the 21st year was 6.58%, with a year-on-year increase of + 1.67%. We believe that in the long run, due to the low gross profit margin of group buying and new stores in Central China, the increase of the proportion of these two businesses will put some pressure on the gross profit margin, but the improvement of capacity utilization in South China and North China will positively drive the company’s gross profit margin. The increase of scale effect and brand effect is expected to stabilize or slightly reduce the company’s sales expense rate. On the whole, the gross sales difference is expected to remain stable.
Profit forecast and investment rating of the company: the business layout of the company in Central China is smooth. The M & a project in Central China has been completed in March 2022. It is speculated that Q2 can be consolidated. We estimate that the operating revenue of the company from 2022 to 2024 will be RMB 1.772 billion / 2.329 billion / 2.922 billion respectively, with a year-on-year increase of 28.86% / 31.37% / 25.51% respectively; The net profit attributable to the parent company was 242 / 294 / 348 million yuan respectively, with a year-on-year increase of – 21.18% / 22.20% / 19.03% respectively; From 2021 to 2023, the corresponding PE is 32 / 27 / 22 times respectively, maintaining the “recommended” rating.
Risk warning: risks caused by epidemic situation; Food safety risks; The opening speed of the store was lower than expected; Fluctuation risk of raw materials; The profit and loss of changes in fair value fluctuates greatly.
