\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 305 Jiangsu Hengshun Vinegar-Industry Co.Ltd(600305) )
Events
On the evening of April 25, 2022, the company released the 2021 annual report and the first quarterly report of 2022: in 2021, the company achieved a revenue of 1.893 billion yuan (year-on-year – 6.45%), a net profit attributable to the parent company of 119 million yuan (year-on-year – 62.28%), and a net profit not attributable to the parent company of 108 million yuan (year-on-year – 62.01%); In 2022q1, the revenue was 572 million yuan (year-on-year + 10.43%); The net profit attributable to the parent company was 77 million yuan (year-on-year – 0.75%), and the non net profit deducted was 70 million yuan (year-on-year + 1.85%).
Key investment points
Costs and expenses are high, and there is a slight pressure in the first quarter of 2022
According to the annual report, the revenue of 2021q4 was 534 million yuan (year-on-year – 6.65%), the net profit attributable to the parent was -16 million yuan (year-on-year – 118.69%), and the net profit not attributable to the parent was -05 million yuan (year-on-year – 105.91%). It is expected that it is mainly due to the obvious decline in sales in important regions affected by the epidemic, the rise in the price of raw and auxiliary materials and the year-on-year rise in sales expenses.
In 2021, the company’s gross profit margin was 37.58% (- 3.18pct), and in 2021q4, the gross profit margin was 33.40% (- 6.37pct). The decline was mainly due to the continuous rise of raw material costs. The ratio of sales expenses / administrative expenses / financial expenses in 2021 was 18.15% / 10.76% / 0.30%, with a year-on-year increase of + 4.86 / + 2.04 / + 0.01pct. The increase of sales expense rate is mainly due to the increase of advertising expenses and market promotion expenses; The increase of management expense rate is mainly due to the increase of employee salary and depreciation expenses; The financial expense rate was basically the same. The net profit margin in 2021 was 6.25% (-9.64pct) and that in 2021q4 was – 2.92% (-17.77pct), which was mainly due to the decline of gross profit margin, the increase of advertising, promotion and R & D investment, and the increase of sales expenses and R & D expenses.
In 2022q1, the revenue was 572 million yuan (+ 10.43%), and the net profit attributable to the parent company was 77 million yuan (- 0.75%). The gross profit margin of 2022q1 company is 37.90% (-1.47pct), which is expected to be mainly due to the high price of raw materials. The ratio of sales expenses / administrative expenses / financial expenses was 12.07% / 9.17% / 0.22, respectively -0.40 / + 0.17 / – 0.23pct year-on-year. The net profit margin of 2022q1 is 12.99% (-2.41pct), which is mainly due to the decline of gross profit margin and the increase of R & D expenses.
In 2022q1, core products grew steadily and online sales grew brightly
By product, in 2021, condiments achieved a revenue of 1.846 billion yuan (- 5.28%) and a gross profit margin of 36.96% (- 3.87 PCT); Among them, the revenue of vinegar / cooking wine was RMB 1.211 billion / 321 million respectively, with a year-on-year increase of – 10.25% / + 1.20% respectively. 2022q1 condiment achieved a revenue of 558 million yuan (+ 14.12%); Among them, the revenue of vinegar / cooking wine was 355 / 107 million yuan respectively, with a year-on-year increase of + 6.64% / + 17.50% respectively.
In terms of component price, the sales volume of vinegar / cooking wine in 2021 was 175500 / 74400 tons respectively, with a year-on-year increase of – 1.26% / – 1.68%, and the ton price was 6899 / 4310 yuan / ton respectively, with a year-on-year increase of – 8.65% / + 3.53%.
By region, the revenue of East / South / central / West / North China in 2021 was RMB 965 / 2.94 / 3.11 / 1.57 / 119 million, a year-on-year increase of – 4.00% / – 9.65% / – 5.62% / – 8.64% / + 1.90%. In 2022q1, the revenue of East / South / central / West / North China was RMB 281 / 0.91/0.97/0.52/0.37 million, a year-on-year increase of + 10.10% / + 18.28% / + 13.49% / 33.02% / + 14.71%.
In terms of channels, the distribution / direct sales revenue was 1.706 billion yuan and 140 million yuan respectively, with a year-on-year increase of – 3.07% / – 25.84%; Among them, online sales amounted to 185 million yuan (+ 34.60%), accounting for 10.02% (2.93 PCT). In 2022q1, the distribution / direct sales revenue was 541 / 18 million yuan respectively, with a year-on-year increase of + 13.83% / + 23.78%; Among them, online sales amounted to 54 million yuan (+ 26.27), accounting for 9.63% (+ 0.92pct). In 2021, there was a net increase of 381 to 1820 dealers. By the end of Q1 in 2022, there were 1829 dealers, with a net increase of 9.
A number of reforms have made concerted efforts, and 2022 can be expected
In 2022, the company’s main condiment business sales + 10%, deducting non net profit + 5%. The company has launched a number of reforms, which we believe mainly include the following aspects:
Strategy: the company plans to spin off the mall business, focus on the main business of condiments, and focus on the product strategy of “making deep vinegar, high wine and wide sauce”. Improve the whole category system of vinegar (balsamic vinegar, aged vinegar, white vinegar, rice vinegar and fruit vinegar), wine (Baihua brand series drinking rice wine, multi scene application cooking wine), sauce (multi-functional soy sauce and pickles), oil (healthy edible oil), gift (gift box products) and composite seasoning.
In terms of production capacity: in November 2021, the company issued a non-public offering plan, which plans to raise no more than 2 billion yuan and build a new 435000 tons of condiment production capacity. At that time, Hengshun will have a production capacity of 455000 tons of vinegar and 150000 tons of cooking wine, with a total production capacity of more than 800000 tons, which will help open space for the company’s performance.
Channel: upgrade the eight war zones, strengthen the expansion of catering channel and new retail, and continue to make efforts through peripheral markets and online channels.
Products: the layout of new categories such as watercress and compound condiments is expected to contribute to the increment.
Incentive: in August 2021, the company completed the repurchase of 10.02 million shares at an average price of 17.29 yuan / share, which is intended to be used for equity incentive, which is expected to stimulate the enthusiasm of employees.
Profit forecast
We believe that there is still much room for development in the vinegar industry. As the leader of the vinegar industry, the reform of the company continues to deepen. With the mitigation of the epidemic, the recovery of consumption and the decline of raw material costs, and the implementation of price increases, the company is expected to achieve restorative growth in 2022. Regardless of the impact of additional issuance on the company’s performance, we expect EPS to be 0.12/0.18/0.22 yuan from 2022 to 2024, and the current share price corresponding to PE is 80, 55 and 45 times respectively. It is covered for the first time and given a “recommended” investment rating.
