\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 305 Jiangsu Hengshun Vinegar-Industry Co.Ltd(600305) )
Short term profits are under pressure and focus on recovery opportunities
Jiangsu Hengshun Vinegar-Industry Co.Ltd(600305) released the annual report of 2021 and the first quarterly report of 2022, with a revenue of 1.89 billion yuan in 2021, a year-on-year decrease of 6.45%; The net profit was 6.23 billion yuan, a year-on-year decrease of 1.02%. The revenue of 2021q4 was 530 million yuan, a year-on-year decrease of 6.7%; The net profit loss was 16 million yuan. In 2022q1, the revenue was 570 million yuan, a year-on-year increase of 10.4%; The net profit was 80 million yuan, a year-on-year decrease of 0.75%. Taking into account the impact of the epidemic and cost pressure, the profit forecast for 20222023 is lowered. It is estimated that the net profit from 20222024 will be 125 (- 2.65), 152 (- 3.16) and 192 million yuan, and the EPS will be 0.12 (- 0.27), 0.15 (- 0.32) and 0.19 yuan respectively, with a year-on-year increase of 5.2%, 21.6% and 25.9%. The current share price corresponding to PE is 83.5, 68.7 and 54.5 times. We are optimistic about the long-term prospects of the company and maintain the “overweight” rating.
The annual report is in line with the previous forecast, the revenue of the first quarter is in line with the expectation, and the performance is slightly lower than the expectation
Disturbed by community group buying in 2021, the annual seasoning revenue decreased by 5.3% year-on-year, failing to meet the annual target. Affected by the epidemic in 2021q4, the growth rate of revenue dropped to -6.7% year-on-year, and in 2022q1, the revenue increased by 10.4% year-on-year, including the seasoning increased by 14.1% year-on-year. However, the impact of the epidemic on mobile sales in March was obvious, and the channel inventory also increased. In the first quarter, vinegar increased by 6.6% year-on-year, cooking wine increased by 17.5% year-on-year, and minor flavor products increased faster. The low growth rate of 10.1% in East China market and the rapid growth outside East China also verify the effectiveness of the company’s market expansion strategy.
The increase of expenses in the fourth quarter led to a loss, and the profit in the first quarter was under pressure
In 2021q4, the gross profit margin decreased by 6.4pct to 33.4%, which should be related to the increase of raw material cost and the proportion of cooking wine with low gross profit margin. The year-on-year increase in the sales expense ratio of 10.3pct to 23.2% was mainly due to the loss, which was caused by the company’s increased investment in advertising and promotion. In 2022q1, the gross profit margin still fell by 1.5pct year-on-year, which is still related to the increase of raw material cost and the change of product structure. In the off-season after the festival, the company’s investment expenses converged, and the rate of various expenses changed little. The annual cost increase is a common feature of the industry. Under the superposition of the epidemic, the cost investment is not reduced, and it is estimated that the short-term profit is still under pressure.
Marketing reform continues and moves forward amid fluctuations in 2022
Jiangsu Hengshun Vinegar-Industry Co.Ltd(600305) straighten out the internal mechanism, reform from personnel changes, incentive methods, organizational structure, etc., and announce that it is planned to carry out equity incentive by means of repurchase. After completion, the motivation of employees will be improved. The epidemic has a negative impact on short-term sales. The company seeks growth points from the aspects of category expansion (soy sauce, aged vinegar, compound condiments, etc.) and market expansion. We judge that the business rhythm of the whole year will rise and fall with the degree of epidemic prevention and control, and suggest paying attention to the opportunity of consumption recovery after the epidemic.
Risk tips: macroeconomic fluctuation risk, market expansion less than expected, raw material price fluctuation risk, etc.
