\u3000\u30 Chongqing Baiya Sanitary Products Co.Ltd(003006) 73 Petpal Pet Nutrition Technology Co.Ltd(300673) )
Under the impact of multiple factors, the performance declined in 2021, and the profitability of Vietnamese factories improved significantly in 2022q1 after the resumption of production
The company disclosed the annual report of 2021 and the first quarterly report of 2022. In 2021, the operating revenue was 1.271 billion yuan (- 5.15%), and the net profit attributable to the parent company was 60 million yuan (- 47.73%); In 2022q1, the operating revenue was 343 million yuan (+ 7.03%), and the net profit attributable to the parent company was 29 million yuan (+ 22.12%). With the shutdown of the Vietnamese factory in early August and the increase of manufacturing costs after the resumption of production at the end of October, the company's performance in 2021 declined more than expected due to the combination of blocked shipping, the appreciation of the RMB against the US dollar and the increase in the cost of newly invested capacity. In 2022q1, the factory in Vietnam recovered and achieved initial results. While maintaining the performance growth, the company achieved the improvement of profitability, and the gross profit margin increased by 2.73 percentage points to 24.66% year-on-year. Considering the increase of sales expenses caused by China's market development and the uncertainty of the release rhythm of overseas production capacity under the influence of the epidemic, we lowered the company's net profit attributable to the parent company in 20222023 to 158 (- 0.12) and 211 (- 27) million yuan respectively, increased the net profit attributable to the parent company in 2024 to 283 million yuan, corresponding to EPS of 0.62 (- 0.05) / 0.83 (- 0.11) / 1.12 yuan respectively, and the current share price corresponding to PE in 20222024 is 24.6/18.5/13.8 times, Optimistic about the company's long-term development in the pet food market and maintain the "buy" rating.
With the smooth resumption of production of Vietnamese factories and the release of new production capacity, the overseas market is expected to return to positive growth
Vietnamese factories have gradually returned to normal and are expected to return to the pre epidemic capacity level in 2022. At the same time, the company's planned production expansion projects with increased raising and investment are progressing smoothly: some completed projects of the 9200 ton pet snack food project in Cambodia have been put into trial production in 2021q3, and the profit and loss balance has been basically realized in a single month in December; The 40000 ton pet dry food project in New Zealand is also gradually completed and put into operation; The 30000 ton pet wet food project in New Zealand invested by non-public issuance of convertible bonds is also advancing in an orderly manner. The resumption of factory production in Vietnam and the orderly release of new capacity are expected to promote the company's overseas business to usher in a double recovery of revenue and profit margin in 2022.
With both brand building and channel expansion, the Chinese market is expected to return to high growth
At present, the company has basically completed the framework of its own brand. With the continuous use of high-end dry grain, wet grain and new main grain production lines, the company's capacity advantage of its own brand in China will be further reflected. Meanwhile, the company's online Jingdong tiktok, Tmall and other platform providers and the voice, red book, WeChat small program and other content of social e-commerce platform for multi-level layout. Offline channels adopt a combination of distribution and direct sales such as direct supply of pet hospitals and pet supermarkets. The superposition of self built brands and the expansion of channels will promote the company's revenue in the Chinese market to return to high growth.
Risk tip: Overseas capacity expansion is lower than expected; The construction of independent brand is less than expected; Large fluctuation of exchange rate, etc
