\u3000\u3 China Vanke Co.Ltd(000002) 299 Fujian Sunner Development Co.Ltd(002299) )
Event:
Fujian Sunner Development Co.Ltd(002299) released the 2021 annual report: in 2021, the company’s total operating revenue was 14.478 billion yuan, up 5.34% year-on-year, and the net profit attributable to the parent company was 448 million yuan, down 78.04% year-on-year.
Key investment points:
The chicken price is low, the cost is rising, and the performance is under pressure in the short term.
① in 2021, the total operating revenue of the company was 14.478 billion yuan (year-on-year + 5.34%), and the net profit attributable to the parent company was 448 million yuan (year-on-year – 78.04%). During the reporting period, the growth rate of the company’s sales volume remained stable. The sales volume of chicken and meat products were 1055400 tons (year-on-year + 7.86%) and 224600 tons (year-on-year + 11.13%) respectively. The price of white feather broiler remained low, and the cost of feed raw materials continued to rise. The company achieved a net profit of 448 million yuan in the whole year. Excluding the impact of external market factors such as the rise of raw materials such as corn and soybean meal and the decline of chicken sales price in 2021, the company’s annual net profit will increase by about 1.83 billion yuan (about the same ratio + 12%) compared with 2020.
② from the change of interest rate, in 2021, the gross profit margin of the company’s breeding sector was 4.72% (down 13.15 PTCs compared with the same period last year), and that of the food sector was 16.62% (down 10.84 PTCs compared with the same period last year). Comprehensive analysis shows that the gross profit margin of sales is 8.71% (down 11.59 PTCs compared with the same period last year), and the net profit margin of sales is 3.12% (down 11.73 PTCs compared with the same period last year).
③ from the perspective of expense change, during the reporting period, the company’s sales expense was 306 million yuan (year-on-year + 41.3%), which was mainly used for brand promotion and construction, and the management expense was 246 million yuan (year-on-year + 9.09%); Financial expenses were 138 million yuan (year-on-year + 23.52%). Food brand investment increased, and the overall cost increased.
Provenance breakthrough has been certified, and the breeding end has been incrementally improved. In December 2021, the white feather broiler mating line “Shengze 901” independently developed by the company passed the appraisal, marking a milestone breakthrough in the development of China’s white feather chicken industry. The “Shengze 901” mating line has strong local adaptability and genetic stability, high egg production rate, egg breeding qualification rate, fertilization rate and hatching rate of parental breeders, fast weight gain, more meat production, high feed conversion efficiency and better comprehensive performance than imported varieties, It is suitable for breeding in various regions of China. With the advantage of “Shengze 901”, the breeding of the company will continue to grow in 2021. At the same time, the company has completed the closed loop of the whole industrial chain. In the future, the seed source advantage will be further transformed into cost advantage, which improves the industry competitiveness of the company.
The strategy of building popular products at the food end has achieved results, and the C-end business has developed rapidly. In 2021, the company’s newly launched “crispy fried chicken” and “Dudu wings” successfully achieved sales of more than 10 million a month. The transformation of the downstream food processing sector from the industrial chain to the value chain has promoted the rapid growth of the C-end business. The C-end growth rate of the company in 2021 is particularly obvious, and the three-year compound growth rate has reached about 70%. During the reporting period, the tax revenue of C-end exceeded 1 billion yuan, accounting for more than 15% of the revenue of food deep processing sector from about 7% in 2019. Among them, the growth rate of online and new retail business has increased by leaps and bounds, and the proportion of C-end sales has increased from less than 10% to more than 50%. From 2019 to 2021, the C-end channel structure was continuously optimized, and the offline channel sales expanded steadily at a compound annual growth rate of more than 25%. At the same time, the online platform and the new retail platform increased significantly at a compound annual growth rate of more than 250% and more than 300% respectively.
Profit forecast and investment rating considering the impact of the deregulation of industrial capacity, the price of chicken will rise in 2022 and the profitability of the company will be improved. The seed source advantage of “Shengze 901” is expected to be further transformed into cost advantage in the future. We believe that the net profit attributable to the parent company from 2022 to 2024 is 843 / 2845 / 3047 million yuan, corresponding to 30.26/8.96/8.37 times of PE respectively, maintaining the “buy” rating.
Risk warning: the risk of chicken price fluctuation; Risk of price fluctuation of raw materials; Risk of epidemic disease; The risk of food end explosion is less than expected; The risk that the company’s performance expectations do not meet the standards, etc.
