\u3000\u3 Shengda Resources Co.Ltd(000603) 866 Toly Bread Co.Ltd(603866) )
Performance meets expectations
The company achieved a revenue of 1.45 billion yuan in 2022q1, a year-on-year increase of 9.43%; The net profit attributable to the parent company before and after deduction was 158 million yuan and 150 million yuan, a year-on-year decrease of 2.80% and 0.96%, and the performance was in line with market expectations. Revenue recovered 10% growth, and profits were under pressure in the short term. Maintain the forecast of net profit attributable to parent company of RMB 854 million, 966 million and 1091 million from 2022 to 2024, with EPS of RMB 0.90, 1.01 and 1.15 respectively, and the corresponding PE of current stock price is 24.2, 21.4 and 18.9 times respectively. The proportion of new products and China insurance products increased, and the production capacity continued to expand. In the medium and long term, the valuation entered a reasonable range and maintained the “buy” rating.
2022q1 demand has recovered
The bread business has accelerated, close to the annual growth target of 10%, mainly due to the release of production capacity and the rebound of market demand in some regions in the short term. In terms of subregions, the relatively mature base markets in Northeast China, North China and central China increased by 2.2%, 5.5% and 4.6% respectively year-on-year. The Northeast market was affected by the epidemic, Limited Logistics and large superposition base, realizing low-speed growth. The key offensive markets in East China and South China increased by 33.6% and 11.1% respectively, mainly due to the gradual release of the effect of channel expansion in the early stage, as well as the impact of the epidemic in East China and the benefits of people’s livelihood products; The smaller regional markets in Central China and Northwest China increased by 14.4% and 19.2% respectively, with a good momentum.
The net interest rate fell, mainly due to the rise in the costs of flour, oil, freight and so on
The company’s net interest rate in 2022q1 was 10.88%, down 1.39pct year-on-year, at a historically low level. The cost of bulk oil and fat is expected to drop by 950.00 PCT, mainly due to the increase in the cost of bulk oil and fat; The sales expense ratio decreased by 0.77 PCT year-on-year, and the management expense and R & D expense ratio increased by 0.21 PCT and 0.32 PCT year-on-year respectively, with obvious cost control; Financial expenses increased by 0.70pct year-on-year, mainly due to the interest expense of short-term borrowings.
Maintain the set target, short-term demand and raw material cost remain to be observed
The company continues to strive to achieve the double-digit growth target of revenue and profit. Affected by the epidemic in the short term, the promotion of new products is limited, and the demand may fluctuate. The price of flour and oil will be locked until June. It is expected that 2022h1 will have a slight impact, but it is generally controllable, and the subsequent cost changes still need to be observed. In the medium and long term, the company continues to promote the new products of China Insurance and improve the product structure; At the same time, we will continue to promote the construction of new production capacity. Factories in Sichuan and Zhejiang are expected to be put into operation one after another, and the nationwide layout is still actively promoted.
Risk warning: the nationalization fails to meet expectations, the risk of raw material price fluctuation, food safety problems and intensified competition.
