\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 305 Jiangsu Hengshun Vinegar-Industry Co.Ltd(600305) )
Event: on April 25, the company announced that in 2021, the revenue / net profit attributable to the parent company were 1.893 billion yuan and 119 million yuan respectively, with a year-on-year increase of – 6.5% / – 62.3%; In the single quarter of 22q1, the revenue / net profit attributable to the parent company were RMB 572 million / 77 million respectively, with a year-on-year increase of + 10.4% / – 0.8%.
The fundamentals continued to improve, and the reform progressed steadily under adverse circumstances. In 2021, the revenue reached 1.893 billion yuan, a year-on-year increase of – 6.5%, close to the lower limit of the previous forecast, of which the revenue of 21q4 was – 6.7% year-on-year, and the decline was significantly narrowed month on month, mainly due to the price increase to stimulate the preparation of goods + the repair of the demand of the East China market. 22q1 achieved a revenue of 572million yuan, a year-on-year increase of +10.4%, of which the main seasoning business was +14.1% year-on-year, continuing the month on month improvement trend, which is expected to be mainly due to the stable sales during the Spring Festival and the channel’s active stock under the condition of low inventory.
In terms of products, in 2021, the revenue of vinegar / cooking wine was – 10.3% / + 1.2% year-on-year. The decline of vinegar in the main industry was large, which dragged down the overall performance. It is expected to be mainly affected by the adjustment of product structure. 22q1 single quarter, vinegar / cooking wine revenue was + 6.6% / 17.5% year-on-year. The high growth of cooking wine is expected to be mainly due to the upgrading of product structure and the rapid volume stage of the industry.
In terms of subregions, in 2021, the revenue of East China / North China was – 4.0% / + 1.9% year-on-year. The decline in the core market in East China was mainly affected by the Nanjing epidemic, but the performance was still better than the whole. The revenue of South China / Central China / West China was – 9.7% / – 5.6% year-on-year, with a large decline. It is expected that it is mainly due to the weak industry demand and the phased contraction of the company’s peripheral market channels. In the single quarter of 22q1, the revenue of East / Central China was + 10.1% / 13.5% year-on-year, and that of South / West / North China was 18.3% / 33.0% / 14.7% year-on-year. The peripheral markets returned to the high-speed expansion channel.
In terms of channels, in 2021, the number of distributors of the company was 1820, with a year-on-year increase of 26%. The new distributors are mainly concentrated in East China, central China and West China; 22q1 in a single quarter, the number of dealers of the company was 1829, with a month on month increase of 9. It is verified that although the company’s short-term operation is under pressure, the pace of internal reform and channel expansion has not stopped, including the introduction of marketing directors from outside and the integration of new retail channel resources.
Cost pressure is superimposed on cost investment, and profitability continues to be under pressure. 1) Gross profit margin: the gross profit margin in 2021 was 37.6%, year-on-year -3.2pct, mainly due to cost pressure and product structure adjustment, of which 21q4 was -6.4pct year-on-year. The price increase in October was difficult to fully hedge the cost pressure, and 22q1 was -1.5pct year-on-year, and the cost continued to be under pressure. 2) Expense ratio: in 2021, the sales expense ratio was 18.2%, with a year-on-year increase of + 4.9pct, of which 21q4 was + 10.3pct, mainly due to the channel reform and the increase of advertising in the second half of the year, and 22q1 was -0.4pct year-on-year, basically stable. 3) Net interest rate: the net interest rate in 2021 was 6.3%, with a year-on-year increase of -9.4pct, mainly due to the cost pressure and the increased investment in expenses. Among them, 21q4 was -17.8pct year-on-year, which was also disturbed by the income of financial products. The net interest rate in 22q1 was -1.8pct year-on-year, mainly due to the pressure on the cost side.
Continue to pay attention to the fundamental improvement of the company driven by internal change and demand recovery. Internal reform: the company has continued to promote reform despite adversity for 21 years. On the one hand, the company has completed stock repurchase for equity incentive (or launched relevant plans in 22 years or later) to bind the medium and long-term interests of employees; On the other hand, the company will hold the general election of the board of directors in 21 years and introduce several FMCG industry talents from outside, which is expected to promote the deepening and implementation of this round of reform. Demand recovery: it is expected that 22q2 channel will replenish inventory to make up for the impact of the epidemic in East China on the market. At the same time, the steady repair of macro demand in 22h2 will further drive the improvement of demand.
Investment suggestion: it is estimated that the net profit attributable to the parent company from 2022 to 2024 will be 127 / 150 / 176 million yuan, a year-on-year increase of + 7.2% / 18.1% / 16.7%, corresponding to EPS of 0.13/0.15/0.18 yuan and PE of 78 / 66 / 57x. Considering the continuous change of the company and the recovery of demand, it will be covered for the first time and rated as “prudent recommendation”.
Risk tip: the effect of internal reform is less than expected, the channel expansion is less than expected, food safety problems, etc.
