\u3000\u3 Shengda Resources Co.Ltd(000603) 317 Sichuan Teway Food Group Co.Ltd(603317) )
Core view
The company announced the first quarterly report of 2022: Tianwei 2022q1 achieved a revenue of 630 million yuan, a year-on-year increase of + 20.6%; The net profit attributable to the parent company was 100 million yuan, a year-on-year increase of + 25.3%; The net profit deducted from non parent company was 98 million, a year-on-year increase of + 27.3%.
Channel inventory replenishment + crayfish seasoning products drive revenue growth. In terms of products, the core product of 2022q1 company, hot pot seasoning / Chinese dish seasoning, generated revenue of 240 million yuan and 350 million yuan respectively, with a year-on-year increase of – 3.2% / + 45.0%. The decline in the growth rate of hot pot seasoning is mainly due to the contraction of promotion compared with 2021q1 + the high base in the early stage; The rapid growth of Chinese cuisine seasoning is mainly due to the rapid growth of crayfish and pickled fish seasoning + replenishment of inventory through channels during the Spring Festival. In terms of subregions, in 2022q1, the revenue of Southwest / East / central / Northwest / North / Northeast / South China was + 17.8% / + 20.7% / + 20.6% / + 23.5% / + 43.1% / – 8.5% / + 22.7% year-on-year. The revenue of main sales areas recovered. East / South China with serious Q1 epidemic still achieved rapid growth and highlighted business resilience.
In terms of distribution channels, 2022q1 distribution / customized meal adjustment / e-commerce increased by + 23.4% / + 13.0% / – 20.2% year-on-year. The rapid growth of distribution channels is mainly due to the replenishment of inventory by channels during the Spring Festival. As of Q1, the number of distributors of the company was 3368 (year-on-year – 41), mainly because the company focused on channel resources and integrated and optimized some small businesses with weak strength.
The cost contraction has significantly improved profitability. In 2022q1, the gross profit margin of the company decreased by 1.7pct to 36.0% year-on-year, mainly due to the sharp rise in the prices of raw materials and packaging materials. However, due to the company’s reduction in gift giving, the gross profit margin was + 7.8pct month on month. The ratio of sales / management / R & D expenses of 2022q1 company was – 4.9 / – 0.2 / + 0.2pct year-on-year respectively; The sales expense rate decreased significantly, mainly because the company reduced the investment of advertising expenses and increased the threshold of buying and giving gifts. Therefore, in 2022q1, the net profit margin of the company recovered to 15.9%, with a year-on-year increase of + 0.6pct.
Employee incentive in place + channel optimization and adjustment, and the performance flexibility in 2022 can be expected. In recent years, the company has continued to optimize and adjust employee incentives and channels. Since 2021, the salary of sales personnel has continued to increase. In 2022, the proportion of basic salary of sales personnel will increase from 30% to 70%, and the sales enthusiasm will be significantly boosted. In addition, in the past two years, the company’s dealers have developed rapidly, and the business strength of some small businesses does not match the development of the company. This year, the company began to sort out the distribution team gradually, and its resources are gradually inclined to local big businesses; In view of the problem of fleeing goods in the past, the company has strengthened the audit of purchase and gift promotion and the control of fleeing goods. At present, the channel has returned to health. In the context of slowing industry competition and cost contraction, we are optimistic about the performance release of Tianwei in 2022.
Risk tips: the price of raw materials has risen sharply, industry competition has intensified, and the recovery of the epidemic is not as expected.
Investment suggestion: the fundamental low point has passed, and the performance is expected to improve quarter by quarter to maintain the “buy” rating. Taking into account the recent rapid rise in raw material prices, we lowered our previous profit forecast. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be RMB 270 / 380 / 470 million (previously RMB 320 / 43 / 640 million), with a year-on-year increase of 46% / 39% / 26%; The current share price corresponds to PE 46 / 33 / 26x respectively. We believe that after the active destocking in 2021, the channel is back to health. Under the leadership of a new round of equity incentive, the company’s operation is expected to return to normal, enter the low base range of q2-q3, with predictable performance flexibility and maintain the “buy” rating.
