\u3000\u3000 Toly Bread Co.Ltd(603866) (603866)
Key investment points
Event: the company released the performance express for 2021. In 2021, the company achieved a revenue of 6.34 billion yuan, a year-on-year increase of 6.4%, and a net profit attributable to the parent company of 760 million yuan, a year-on-year decrease of 13.5%; In 2021q4, the revenue in a single quarter was RMB 1.68 billion, a year-on-year increase of 5.6%, and the net profit attributable to the parent company was RMB 200 million, a year-on-year decrease of 0.8%.
Repeated sporadic outbreaks and government power rationing affect income growth. 1. On the demand side, with the improvement of the epidemic situation nationwide, bread consumption has gradually recovered since 2021; Sporadic outbreaks are repeated, and the demand in some areas is under pressure. 2. On the supply side, affected by the tight power supply, factories in Jiangsu, Dongguan, Changchun, Shenyang, Dalian, Shandong and other places have received power restriction notices from the local government, and short-term production is limited. 3. By category, the mellow star products and the new qiaole corner bread, rock baked cheese cake, cheese bread and red bean / mung bean pastry performed better, and the product competitiveness was improved. 4. In terms of regions, the company has continuously increased its investment in key customers in new markets such as East China and South China, and continuously improved the quality of single stores; Northeast, North China and other mature markets accelerated the refinement and sinking of channel network.
In 2020, the superimposed cost of high base will increase and the profitability will decline. The overall profitability of the company has decreased, mainly due to: 1) the price rise of some raw materials and the increase of product costs. 2) In the same period of 2020, affected by the national phased social security relief policy, the labor cost base is low, and has returned to normal since 2021. 3) In the same period of 2020, there were few promotional activities affected by the epidemic. Since 2021, promotional activities have increased, and the return rate and discount rate have increased. As the competition in the short-term bread industry intensifies, the company increases promotional activities and continues to seize market share.
A nationwide production base was built, and the expansion of production capacity was steadily promoted. 1. In terms of market, the company has established production bases in 20 regions across the country and radiated sales to the surrounding areas; Continue to increase investment in mature markets in North China and Northeast China, further tap market potential, consolidate and improve market share. 2. In terms of capacity, gradually promote capacity expansion. Jiangsu production base has been put into operation in March 2021, with a design capacity of 22000 tons; The production bases in Shenyang, Zhejiang, Sichuan and Qingdao are under construction and are expected to gradually release 157000 tons of new production capacity. Expanding production capacity will better meet downstream demand, form scale effect and improve profitability.
Profit forecast and investment suggestions. It is estimated that the net profit attributable to the parent company from 2021 to 2023 will be RMB 760 million, RMB 840 million and RMB 930 million respectively, EPS will be RMB 0.80, RMB 0.89 and RMB 0.98 respectively, and the corresponding dynamic PE will be 34 times, 31 times and 28 times respectively, maintaining the “hold” rating.
Risk warning: the price of raw materials may fluctuate sharply; Risk of market development failing to meet expectations.
