\u3000\u30 Shaanxi Zhongtian Rocket Technology Co.Ltd(003009) 73 Ligao Foods Co.Ltd(300973) )
Key investment points
Event (1): the company released the annual report of 2021, and achieved an annual revenue of 2.817 billion yuan, a year-on-year increase of + 55.66%; The net profit attributable to the parent company was 283 million yuan, a year-on-year increase of + 21.98%; Deduct non net profit of RMB 269 million, a year-on-year increase of + 19.20%. (add back the equity incentive fee and excess reward, deduct the non net profit of about 299 million yuan, a year-on-year increase of + 32.53%)
Event (2): the company released the first quarterly report of 2022, and the revenue of 22q1 was 630 million yuan, a year-on-year increase of + 8.83%; The net profit attributable to the parent company was 40.022 million yuan, a year-on-year increase of – 45.29%; Deduct non net profit of RMB 391392 million, a year-on-year increase of – 45.64%. (add back the equity incentive expenses and deduct the non net profit of 547386 million yuan, a year-on-year increase of – 23.97%).
The slowdown in the growth rate of frozen baking in 22q1 is mainly due to the impact of the sealing and control terminal of the epidemic. The year-on-year revenue of q4.3 billion yuan was + 4.04 billion yuan; The net profit attributable to the parent company was 855359 million yuan, a year-on-year increase of + 16.58%; Deduct non net profit of 770592 million yuan.
(1) in terms of products, the annual revenue of frozen baking in 21 years was 1.72 billion yuan, a year-on-year increase of 79.70% (including Q4 revenue of 540 million yuan, a year-on-year increase of + 71.7%); The revenue of baking raw materials was 1.096 billion yuan, a year-on-year increase of + 28.65%, of which cream, fruit products and sauces were + 27.0% / 29.3% / 33.2% year-on-year respectively. 22q1 frozen baking revenue was 370 million yuan, a year-on-year increase of + 11.14%; The revenue of baking raw materials was 257 million yuan, a year-on-year increase of + 5.57%. 21q4 continued the high growth trend of the whole year and ended perfectly. 22q1 considered the impact of closure and control due to the epidemic situation. According to the channel survey feedback, frozen baking still achieved a good growth from January to February. It was considered that it was mainly due to the flat or downward decline caused by the closure of small B terminal and the poor cold chain logistics of factory shipment after the epidemic situation was closed and controlled in March. Among them, the growth rate of cake shops and catering channels was lower than that of business super growth rate. At the same time, the growth rate of commercial supermarkets decreased significantly month on month (accounts receivable at the end of 22q1 decreased by 30.52% month on month compared with the end of the year). Considering the impact of the decline of channel income of commercial supermarkets, we expect that it is mainly due to the multiple effects of the epidemic control in South and East China in March + Sam Xinjiang incident + no new large products undertaking high growth rate.
(2) in terms of split volume and price, the sales of frozen baked goods, cream, fruit products and sauces in the whole year of 21 were + 68.6% / 25.2% / 28.9% / 24.7% year-on-year respectively; The price was + 6.6% / 1.4% / 0.3% / 6.8% year-on-year respectively. The rapid development stage of the industry is still mainly driven by volume growth.
(3) from the perspective of different channels, in the whole year of the 21st century, the sales revenue of distribution, direct selling and retail reached 1.83/9.6/20 billion yuan respectively, with a year-on-year increase of + 30.4% / 144.6% / 140.3%. Direct selling maintained rapid growth in the first and second half of the year due to the large volume of business supermarket channels. In the whole year of 21, direct selling accounted for 34.1%, with a year-on-year increase of + 12.4pct. The distribution channel may slow down month on month in the second half of the year due to limited production capacity, base change and other reasons. (distribution growth rate of 21h1 / H2 is + 64.9% / 10.4% respectively)
(4) in terms of regions, in the whole year of 21, South China + 90.4%, East China + 33.7%, central China + 46.3%, North China + 36.3%, southwest + 39.7%, northwest + 23.9% and northeast + 36.6%. The South China market has benefited from the rapid growth of large customers.
The rising cost of raw materials is the main reason for profit pressure. The net interest rates of 21q4 and 22q1 were 10.0% / 6.4% year-on-year respectively, and -2.0 / – 6.3pct year-on-year respectively; The deduction of non net interest rate is 9.0% / 6.2% respectively, and 10.9% / 8.7% respectively after adding back the equity incentive fee and excess reward. The deduction of non net interest rate in 22q1 is – 3.8pct year-on-year. Among them, the gross sales difference in 21q4 was 23.5% (the gross sales difference in 2020 was adjusted according to the accounting standards year-on-year), with a slight decrease of – 1.0pct year-on-year, which was mainly due to the increase in the cost of raw materials such as palm oil + changes in product structure (limited production capacity of q1-3 high gross profit products + low gross profit margin of commercial supermarket channel products). 22q1 gross profit margin was 33.1%, with a year-on-year increase of -3.4pct. Considering the impact of the continuous rise of freight and raw material costs, it was difficult to cover all the cost pressure by raising prices only for some products in early January. The sales expense ratio was 13.0%, with a year-on-year increase of -0.1pct. The management expense rates of 21q4 and 22q1 were 8.4% / 8.9% respectively, with a year-on-year increase of + 3.7/4.7pct, mainly due to the impact of incentive expenses. The R & D expense ratio was 2.0% / 3.5% respectively, with a year-on-year increase of -0.9/1.2pct. The financial expense rate was – 0.4% / – 0.1%, with a year-on-year rate of – 0.2 / – 0.2pct.
We will actively adjust to meet challenges and remain under pressure in the short term and grow in the long term. Frozen baking still has great potential in the multi-channel penetration of bakery and catering, and has long-term growth. The company actively expands its production in the three production areas of South China, East China and North China, and carries out the network layout of six large production bases, so as to seize the dividend of the industry. Looking forward to 22 years, the cost of raw materials is still high, and the company actively adjusts to deal with difficulties: 1) optimize product formula and introduce high-quality and cost-effective raw materials; 2) Put forward the total cost leading plan to improve human efficiency, reduce waste and optimize cost with fine management. 3) Integrate the supply chain, improve the informatization level and continuously improve the operation efficiency. We are still optimistic for a long time that the two wheel drive of Li Gao’s channel product power is faster than the revenue growth of the industry, establish barriers at the end of the production and supply chain, and stabilize our leading position.
Profit forecast and investment suggestions: the frozen baking industry is in a period of rapid growth. It is optimistic that the two wheel drive of Ligao channel’s product power is faster than the industry’s revenue growth, and the establishment of barriers at the end of the production and supply chain in the medium and long term shows the advantage of scale. According to the latest performance of the company, considering the impact of the current epidemic closure on the terminal (offline supermarkets, cake shops and catering stores are temporarily closed) and the impact of the rise in the cost of raw materials such as palm oil, we adjusted our profit forecast. It is estimated that the company’s revenue will be 3.49/45.6/5.83 billion yuan from 2022 to 2024, with a year-on-year increase of 24% / 31% / 28%, The net profit attributable to the parent company is expected to be RMB 270 / 42.2 / 580 million (excluding the impact of equity incentive expenses, the net profit attributable to the parent company is expected to be RMB 330 / 4.6 / 610 million), with a year-on-year increase of – 6% / + 57% / + 39% (excluding a year-on-year increase of 8% / 39% / 32%), EPS is 1.57/2.47/3.42 yuan (excluding 1.96/2.72/3.59 yuan), and that of the previous 22-23 years is 1.95/2.75 yuan, corresponding to 48x, 30x and 22x PE respectively.
Risk tips: increased competition in the industry, the raising and investment projects are not as expected, the development, promotion and sales of new products are not as expected, the measurement deviation risk of industry scale, and the risk of food safety events.
