\u3000\u3 China Vanke Co.Ltd(000002) 568 Shanghai Bairun Investment Holding Group Co.Ltd(002568) )
Event:
The company released the annual report and the first quarterly report. In 2021, the annual operating revenue was 2.594 billion, the same as + 34.66%; Net profit attributable to parent company: 666 million, the same as + 24.38%; Deduct non net profit of 630 million, the same as + 36.63%; EPS0. 89 yuan / share. Among them, Q4’s operating income was 680 million, the same as + 12.97%, and the net profit attributable to the parent was 103 million, the same as – 32.41%. In 2022q1, the operating revenue was 539 million, the same as + 4.14%; The net profit attributable to the parent company was 92 million, the same as – 29.94%; Deduct non net profit of 91 million, the same as – 30.36%. The company plans to increase 4 shares for every 10 shares and pay a dividend of 5 yuan (including tax).
Key investment points:
1. The epidemic affected logistics transportation and production, and the performance growth slowed down. The company’s performance was lower than expected mainly because: 1) in Q4 last year, the logistics and transportation control around the Tianjin factory became stricter, affecting the delivery of products in North China and Northeast China; 2) In Q1 this year, the epidemic situation in Tianjin, Chengdu, South China and Shanghai took turns. Headquartered in Pudong, Shanghai, the company was seriously affected by the epidemic in March, and the production line was shut down. The two-way logistics transportation of raw materials and products of factories in Tianjin, Foshan and Chengdu is blocked. 3) The control of the national logistics and transportation network has been tightened, the transfer of goods between warehouses has increased, and the logistics cost has increased significantly. 4) Although the sales side is blocked, the company’s various brand publicity expenses are still invested as usual, and the sales expense rate increases. At present, the epidemic situation in Shanghai still has an impact on the sales of the company in April. It is expected that in the future, with the improvement of the epidemic situation and the return of logistics and transportation to normal, the performance of the company will be significantly improved.
2. The short-term growth rate of pre mixed liquor dropped, and the growth of digital channels was significant. (1) In terms of products, the pre blending / edible essence business achieved revenue of RMB 2.285273million respectively in 21 years, the same as +33.49%/+37.72%. Although the growth rate of pre blending business slowed to 21.64% in the second half of the year due to weak consumer demand and the impact of Tianjin factory, it maintained rapid growth. Among them, the pre blending business still has steady and rapid growth, mainly due to 1) extending the product matrix: fresh listing will become the third sub brand contributing to sales, help Rio further expand its channels, and will become the incremental responsibility of Rio brand in the future. Strawberry lactic acid bacteria flavor launched by “Rio tipsy”, online customized small beautiful series and season limited hot wine series have also become the focus of brand communication. The sales volume of qiangshuang doubled in 2021, the repurchase rate and repurchase cycle performed well, and its penetration rate among drinkers increased smoothly. 2) Three dimensional brand communication and reconstruction of marketing organization. Maintain brand popularity through high-frequency appearances in popular TV dramas and creative joint cross-border cooperation. In terms of organizational change, the company’s online departments are merged into a comprehensive consumer oriented digital organization integrating product and marketing; Flattening Reform of offline channels and abolishing regional levels; The ready to drink channel has set up a professional key customer department to launch customized services for key customers of the system. In terms of digital construction, the company has built its own data platform CDP based on the accumulated consumer data for 6 years, and established a private domain based on it. Relying on the member applet and the gradually expanding wechat group, the brand can directly interact with consumers, greatly shortening the marketing link and improving the sales efficiency. At present, Rio can reach more than 20 million users, and tens of thousands of applet active users every day. The essence business has been growing steadily for many years. With the generation of new downstream demand and the simplification of production process, the company introduced new customers to contribute new revenue growth. This year, the revenue growth accelerated month on month. (2) In terms of channels, the growth of digital retail channels was bright. The annual revenue of offline channels / digital retail channels / ready to drink channels was RMB 1.814648/97 billion respectively, with a year-on-year increase of + 23.70% / 70.29% / 52.35%. While strengthening the advantages of traditional e-commerce, the company actively embraced emerging e-commerce platforms, and the proportion of digital retail channels increased by 5.4pct to 25.3%.
3. The annual gross profit margin was basically flat, and the decline in net profit margin was mainly due to the reduction of government subsidies. The company’s annual gross profit margin was 65.43%, with a year-on-year increase of -0.07pct, with little change. The gross profit margin of single Q4 increased by 5.03pct to 62.29% year-on-year, mainly due to the adjustment of Q4 accounting policy in 2020 and the inclusion of freight into operating costs. Q4 increased the input of sales expenses, and the gross sales difference decreased by 8.20pct. However, the annual sales expense rate remained stable, with a slight decrease of 0.37 percentage points. In 21 years, the government subsidy decreased from 96 million yuan to 44 million yuan, accounting for 3.28 pct of revenue. Therefore, the annual net interest rate decreased by 2.18 PCT to 25.61%.
Q1, short-term impact on logistics performance. In the first quarter of this year, especially in March, affected by the epidemic, the overall revenue of Q1 increased by only single digits, but the demand side of the company is still strong. It is expected that there will be inventory replenishment demand in the channel after the resumption of work and production, and the equity incentive target is still expected to be achieved throughout the year. On the profit side, the logistics cost increased significantly due to a large number of goods transfer, and the production limited cost increased. The gross profit margin of Q1 decreased by 4.81pct to 62.51% year-on-year. The superimposed brand publicity and promotion activities were carried out at a rhythm, and the sales rate / management rate (including R & D rate) increased by 2.93/2.90pct year-on-year, so the net profit margin decreased significantly by 8.33pct to 16.95%.
5. The driving factors for long-term growth remain unchanged, and the penetration rate of low alcohol drinks will continue to increase. The main tone of the company’s operation in 2022 is “focus on medium and long-term strategy and strive for progress in stability”. The pre blending business will 1) upgrade the brand communication strategy, including signing a new combination of brand spokesmen, sponsoring and implanting more vertical variety shows, online dramas and other hot programs; With the support of the company’s CDP platform, realize more accurate and efficient content dissemination on interest and social platforms. 2) Strengthen the penetration of product matrix and realize multi-channel coordinated development; 3) The digital transformation continues to advance, and the enabling scene goes deep. The diversification of low alcohol liquor tastes is the future development trend of the industry. The company has been deeply engaged in the industry for many years, Rio brand is deeply rooted in the hearts of the people, and the consumption foundation is solid. The promotion of new pre mixed wines with fresh and strong taste that are more suitable for meals is smooth, which is expected to open the second growth curve of consumer demand at the catering end. At the same time, the company has made a forward-looking layout of the liquor business. The Laizhou distillery project has been put into operation. With the communication concept of “lighting up China’s production areas on the world map of whisky”, it has attracted extensive attention in the industry. It is expected that the company’s pre blending business will be empowered in terms of base liquor quality and stability, base liquor cost and brand tonality in the future. In the long run, the company is on the right path and there is no need to worry too much about short-term performance fluctuations. The company has previously issued an equity incentive plan at the end of 2021. Based on the revenue of 2021, the revenue growth from 2022 to 2024 will not be less than 25% / 53.75% / 84.50%, and the year-on-year growth will not be less than 25% / 23% / 20%. The incentive target is stable and shares the company’s growth dividend with employees. The company announced on March 22 that it would use its own funds of 200400 million yuan to buy back shares at a price of no more than 62.27 yuan / share, reflecting its confidence in future development.
6. Profit forecast and investment rating: under the influence of the epidemic, the company’s performance is damaged in the short term, but in the long run, the development trend of low alcohol drinks remains unchanged. The company actively carries out internal organization adjustment and reform to adapt to long-term development, and the logic of long-term growth remains unchanged. We expect the company to realize a net profit attributable to the parent company of RMB 8.1/9.8/1.19 billion from 2022 to 2024, with a year-on-year increase of + 21% / + 21% / + 22%, EPS of RMB 1.08, 1.31 and 1.59 per share and PE of 30 / 25 / 20 respectively. Give a “buy” rating.
7. Risk Tips 1) the promotion of new products does not meet expectations; 2) The production capacity launch progress is lower than expected; 3) Industry competition intensifies and sales expenses increase; 4) The impact of the epidemic exceeded expectations; 5) Food safety risks.
