\u3000\u3 Shengda Resources Co.Ltd(000603) 187 Qingdao Hiron Commercial Cold Chain Co.Ltd(603187) )
Event: Qingdao Hiron Commercial Cold Chain Co.Ltd(603187) released the annual report of 2021 and the first quarterly report of 2022. The company achieved revenue of 2.66 billion yuan in 2021, yoy + 40.8%; Achieved a performance of 230 million yuan, yoy-16.0%. Converted Q4 single quarter revenue of 670 million yuan, yoy + 39.5%; The performance is RMB 30 million, yoy-40.5%. In 2022q1, the company achieved revenue of 840 million yuan, yoy + 47.8%; The performance is RMB 80 million, yoy + 24.8%. The company operates well, and its revenue and performance in 2022q1 exceed the expectations of the capital market. We continue to be optimistic about the progress made by the company in expanding new customers. It is expected that the company will continue to increase its market share in the future.
Q1 revenue increased rapidly: Hairong Q1 revenue increased by nearly 50%. According to the main categories, 1) freezer business maintained rapid growth, with Q1 revenue increasing by 15% ~ 20%, accounting for 60% of the total revenue. 2) Due to the improvement of export sales and the company’s active development of refrigerated cabinet business, Q1 refrigerated cabinet revenue increased by 200% +, accounting for a further increase in the proportion of total revenue. 3) Q1 display cabinet business of supermarkets doubled. In terms of domestic and export sales, Q1 domestic sales revenue grew by nearly 60%; Due to the gradual recovery of overseas demand, Q1 export revenue increased by 20%. We expect that this year, Hairong has a solid position in the freezer industry, and the business of refrigerators, supermarkets and smart sales cabinets is expected to maintain rapid growth.
Affected by costs and accrued expenses, the performance growth rate is slower than revenue: the performance growth rate of Hairong 2021q4 and 2022q1 is slower than revenue. According to our analysis, the main reasons are: 1) the rise of raw material prices. The difference between gross profit margin and sales expense rate in 2021q4 and 2022q1 was – 6.3 / – 0.4pct year-on-year respectively. We expect that the company’s product and customer structure is being optimized, its profitability will gradually recover, and the operation of 2022q1 has been reflected. 2) The accrual of equity incentive expenses has an impact. If the impact of equity incentive fee accrual is not considered, the performance growth rate in 2022q1 is nearly 50%.
Hairong’s growth logic continues to be fulfilled: Hairong has advantages in the field of commercial cold chain: 1) in terms of management, Hairong has a more perfect incentive system and stable core team personnel. 2) The company has the advantages of customization, intelligence and scale. 3) In terms of customer resources, Hairong’s downstream customers are leading enterprises in the food and beverage industry. These leading companies have strict screening standards for suppliers. After Hairong breaks through these large customers, orders will increase in large quantities and customer stickiness will be relatively high. For more information, please refer to the report of the company’s development of a new convenience store in the past few years.
Investment suggestion: we believe that the market underestimates the space of the commercial refrigeration display cabinet industry and the competitive barriers of high-end customers, and has insufficient expectations for the growth potential and performance elasticity of the company. The advantages of Hairong’s scale are gradually being realized and the advantages of Hairong’s specialization are gradually being realized. We expect EPS to be 1.47/1.80 yuan from 2022 to 2023, with a six-month target price of 36.75 yuan, corresponding to 25 times PE in 2022, maintaining the investment rating of buy-a.
Risk tip: due to the uncertainty of overseas epidemic, the price of raw materials has risen sharply, and the expansion of customers is less than expected
