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Bestore Co.Ltd(603719) : leading business model and expected performance growth
The product category is rich and the structure is more balanced Bestore Co.Ltd(603719) positioning high-end snacks, with more than 1500 SKUs, covering five categories: meat snacks, candy cakes, nuts fried goods, dried fruit preserved fruits and vegetarian mountain delicacies. It is a company with a wide range of categories in the leisure food industry. In contrast, the category composition of the company is richer than that of competitors in the same industry, such as Three Squirrels Inc(300783) , Haoxiangni Health Food Co.Ltd(002582) and so on.
High SKU is conducive to the high-end process of the company’s products. The high-end process in the leisure snack industry is still in its infancy. By expanding product categories and exploring in more fields, enterprises can take the lead in finding products suitable for increasing prices and profits.
More balanced sales channels are conducive to Wuxi Online Offline Communication Information Technology Co.Ltd(300959) coordination. The proportion of the company’s online / offline sales revenue has fluctuated in recent years, but the overall ratio is basically maintained at about 1:1, getting rid of the dependence on offline stores in the past, and the structure is relatively balanced.
The offline channel of distribution + supermarket mode is longer than steady, which is not conducive to the development of emerging brands. For example, Chacha food and Yanker Shop Food Co.Ltd(002847) etc. mostly use such channels.
The offline channel of self operated chain mode can improve the customer unit price, but the site selection risk and store expansion risk still exist Shanghai Laiyifen Co.Ltd(603777) and Bestore Co.Ltd(603719) both adopt this mode. The cost of self built channels is significantly higher than that of other schemes, and problems such as site selection risk, store flow and area efficiency ratio are still in progress.
Online e-commerce channels can be quickly nationalized, but it is difficult for snack brands to occupy a strong position in cooperation with e-commerce platforms Three Squirrels Inc(300783) and Bestore Co.Ltd(603719) adopt this scheme. The online traffic of this scheme is unstable, and the e-commerce platform naturally occupies greater advantages in terms of customer drainage and traffic conversion, which is not conducive to snack enterprises to improve their profit margin.
The 21-year roe of the company is 13.2% ( Three Squirrels Inc(300783) 10.6% / Shanghai Laiyifen Co.Ltd(603777) -0.88% / Haoxiangni Health Food Co.Ltd(002582) -1.48%), of which the net profit margin on sales is 3.03% ( Three Squirrels Inc(300783) 2.8% / Shanghai Laiyifen Co.Ltd(603777) -0.36% / Haoxiangni Health Food Co.Ltd(002582) -7.01%), which is significantly higher than many competitors in the same industry.
The growth of 21q4 revenue accelerated, and the reported profit fell, which did not change the long-term trend. The decline in profits in the fourth quarter was mainly due to the year-on-year increase of 210 million yuan in “promotion expenses” and 240 million yuan in depreciation and amortization.
The increase of promotion expenses puts pressure on the current profit, but contributes to the future performance. The growth of the company’s promotion expenses has reshaped the new product process and established a 35 day rapid product launch mechanism. The product sales volume, revenue and profit are expected to catch up later. The number of SKUs of the company increased from 1195 in 21h1 to 1555 at the end of 21, with remarkable results. At the same time, the company’s contract liabilities at the end of the year were 250 million yuan, a year-on-year increase of 29%, accounting for 2.7% of the revenue in the year 21. There were sufficient orders on hand and the future performance can be expected.
Market Review
In the recent week, the food and beverage index rose or fell by – 1.8%, ranking fourth among the 28 industries in Shenwan, outperforming the CSI 300 index by 2.39 PCT. Among the sub industries, beer (+ 0.29%), meat products (- 0.31%) and snacks (- 0.7%) performed relatively well.
Top 5 gainers of individual stocks: Anji Foodstuff Co.Ltd(603696) , Kuaijishan Shaoxing Rice Wine Co.Ltd(601579) , Qingdao Foods Co.Ltd(001219) , Qingdao Richen Food Co.Ltd(603755) , Sanquan Food Co.Ltd(002216)
The top five stocks with declines: St Xifa, Suzhou Weizhixiang Food Co.Ltd(605089) , Qinghai Spring Medicinal Resources Technology Co.Ltd(600381) , Yantai Shuangta Food Co.Ltd(002481) , Sirio Pharma Co.Ltd(300791)
Investment strategy
Key points: 1 Chongqing Fuling Zhacai Group Co.Ltd(002507) , Shanghai Bairun Investment Holding Group Co.Ltd(002568) , are recommended for companies that occupy a leading position in subdivided fields and have a good competitive pattern and strong ability to raise prices. 2. The milk industry giant Inner Mongolia Yili Industrial Group Co.Ltd(600887) , which is basically stable in normal temperature and low temperature milk, has made great efforts in infant powder and cheese business, and has achieved good results in the beginning of the year. 3. For the beer industry with improved competition pattern and high-end certainty, recommend Chongqing Brewery Co.Ltd(600132) , China Resources beer and pay attention to Tsingtao Brewery Company Limited(600600) . 4. Ternary organism with strong downstream demand, limited upstream bargaining power and leading position in oligopoly pattern in horizontal competition.
