\u3000\u3000 Zhongyin Babi Food Co.Ltd(605338) (605338)
Exceeding expectations 1: new chapter of endogenous epitaxial spectrum, number of stores or exceeding expectations
The market believes that in the past 22 years, the company’s stores will continue to have a net increase of less than 300 stores per year.
We believe that the net increase of stores in 21 years is expected to reach a historical peak, and the expansion will be further accelerated in 22 years. 1) 21 years ago, we mentioned in the Zhongyin Babi Food Co.Ltd(605338) in depth report: a leading enterprise of Chinese quick-frozen pasta, with strong store replication and expansion ability “First mover advantage is the company’s core competitiveness. At the same time, relying on the characteristics of low investment, short return cycle, strong profitability and strong store management and control ability, the company has the strength of continuous replication and expansion. After listing, the company has realized the steady expansion of franchise stores by taking the initiative to attract investment / increase subsidies for new stores throughout the country, and the net increase in stores in 21 years may have reached a historical peak (about 500); 2) 22 years: 22 years of extension (the company will realize the national layout through accelerated acquisition, 22h1 company may merge the merger and acquisition project, and it is expected to add more than 600 stores) + endogenous (under the background that Nanjing factory will be launched in 2022, East China with strong brand strength will also accelerate the exhibition of stores, and North and South China will continue to develop steadily at the same time) = it is expected to net increase more than 1300 stores, So as to achieve the unexpected development in the number of stores.
Exceeded expectations 2: the new volume of takeout business and the quality of stores exceeded expectations
The market believes that the main reasons for the positive income of single stores this year are: 1) the development of takeout business; 2) The upgrading of stores leads to the growth of single store revenue; 3) Category expansion; 4) Regular price increases for non core products. The market is still skeptical about the sustainability of the takeout business in promoting the growth of single store revenue. It is worried that the growth of single store revenue in 22 years will return to the track of slowdown in previous years.
We believe that: 1) takeout business: the company has recently added takeout cooperation with meituan and other channels + the proportion of takeout stores has been increasing + many new lunch and dinner products will contribute to the increment of single store revenue in 22 years and are sustainable; 2) Store upgrading, category expansion, conventional price increase of non core products and other measures will continue. 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.
Beyond expectation 3: the group meal business accelerates its development, and its performance may exceed expectations
The market believes that the group meal business will continue its steady development trend.
We believe that: we believe that the group meal business of the company will achieve more than expected development in 22 years. 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 the 21st year, the company increased the staffing of the group meal business department, laying the foundation for the expansion of the group meal business in the 22nd year. In addition, prefabricated products such as lock and fresh packaging may offset the potential impact of some epidemic situations on stores.
More than expected 4: strong cost control, and the gross profit margin may rebound at the bottom
The market believes that the profit of the company in 21 years is lower than expected due to the pressure on the cost side, and the net profit in 22 years is uncertain due to the cost side.
We believe that the cost side: the profit of 21q2 / 21q3 company is slightly lower than expected, which is related to the fact that the upward pressure of cost is higher than the cost dividend brought by the downward price of pig / the price rise of bulk commodities / the launch of Songjiang new production capacity in the middle of the year (with the impact of fixed depreciation). In the future, the company may launch corresponding cost hedging measures for bulk commodities. At the same time, as the production capacity climbs, 21q4 the cost side may be improved; Expense side: in order to open the 2C channel, 21q1 company put higher marketing expenses under pressure on the profit and run side (mainly by increasing the investment in advertising marketing such as focus ladder media and short video, with a sales cost of RMB 30 million). It is expected that the company’s expenses will remain stable in the next 22 years.
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 + 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 from 2021 to 2023 will be 34%, 41% and 23% respectively; The growth rate of net profit attributable to the parent company was 72%, – 5.6% and 5.9% respectively; EPS is 1.2, 1.2 and 1.2 yuan / share; PE was 28, 30 and 28 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 epidemic in China; Food safety issues; Franchise management risk; Failure risk of foreign investment; Raw material price fluctuation risk.
