\u3000\u30 Shaanxi Zhongtian Rocket Technology Co.Ltd(003009) 73 Ligao Foods Co.Ltd(300973) )
Key investment points
Event: (1) Ligao Foods Co.Ltd(300973) released the annual report of 2021. In 2021, the company realized a revenue of 2.817 billion yuan, an increase of 55.66% year-on-year; The net profit attributable to the parent company was 283 million yuan, a year-on-year increase of 21.98%. (2) Ligao Foods Co.Ltd(300973) released the first quarterly report of 2022. In 22q1, the company realized a revenue of 630 million yuan, an increase of 8.8% year-on-year; The net profit attributable to the parent company was 40 million yuan, a year-on-year increase of – 45.3%.
In the past 21 years, the frozen baking business has grown rapidly. In terms of product structure, frozen baking / cream / fruit / sauce / other businesses in 21 years were + 80% / 27% / 29% / 33% / 28% year-on-year respectively. In terms of split volume and price, the growth of various businesses was mainly driven by hot sales, and the sales of frozen baking / cream / fruit / sauce were + 69% / 25% / 29% / 25% year-on-year respectively. In terms of channels, distribution / direct sales / retail are + 30% / 145% / 140% year-on-year respectively. The construction of channel network has been gradually improved. By the end of 2021, the company has more than 1000 salespeople, and its marketing network covers all provinces, municipalities and autonomous regions in China except Hong Kong, Macao and Taiwan. More than 2700 customers cooperate with the company and more than 50000 end customers are served.
22q1 was affected by the epidemic, and the growth of revenue slowed down; Rising costs put pressure on the profit side. The outbreak of the 22q1 epidemic has affected important markets such as Shandong, Guangdong and Shanghai, and the growth rate of Q1 is under pressure. The gross profit margin of 21q4 was 34.5% and that of 22q1 was 33.1%, with a year-on-year increase of – 3.4pct and a month on month increase of – 1.4pct. The decline in gross profit margin was mainly due to the rise in the prices of raw materials such as oil and grease. At present, oil and other prices remain high, which is expected to put some pressure on the profit side throughout the year.
Short term disturbance does not change the logic of long-term growth. The promotion of frozen baking penetration rate is the logic of long-term growth of the industry. The short-term epidemic has suppressed the demand, but the downstream demand will remain strong for a long time. In the long run, the price of raw materials will return to the normal position. In terms of products, the company has sufficient reserves and the channel side will continue intensive cultivation. In 22 years, Henan Weihui factory and Zhejiang factory will also release more production capacity and look forward to the performance growth after the epidemic.
Investment suggestion: as a leader in frozen baking, legao has long been optimistic that it will benefit from the growth of downstream demand, the landing of production capacity at the supply side will expand the scale effect, the diversified layout at the channel side, and the rich reserves of new products at the product side. It is optimistic that the company will maintain the growth trend. As the company’s sales are affected by the epidemic and the profit side is facing cost pressure, the profit forecast is lowered. It is estimated that the total operating revenue of the company from 2022 to 2024 will be RMB 3.689/4.542/5.289 billion, with a year-on-year increase of 30.9% / 23.1% / 16.5%, and the net profit attributable to the parent company from 2022 to 2024 will be RMB 291 / 4.23/576 million, with a year-on-year increase of 2.8% / 45.2% / 36.3%, corresponding to the PE of 44x / 30x / 22x from 2022 to 2024, maintaining the buy rating.
Risk tip: industry competition intensifies, raw material prices continue to rise, capacity expansion is less than expected, etc.
