\u3000\u3 Shengda Resources Co.Ltd(000603) 317 Sichuan Teway Food Group Co.Ltd(603317) )
Event: on April 25, the company announced that the revenue / net profit attributable to the parent company of 22q1 were 629 / 100 million yuan respectively, with a year-on-year increase of + 20.6% / 25.3% respectively.
22q1 achieved a good start and verified the improvement logic of the whole year. In 2021, the revenue reached 629 million yuan, a year-on-year increase of + 20.6%, significantly improved month on month. It is expected to be mainly due to: 1) the stable superposition of mobile sales during the Spring Festival and the low channel inventory in the early stage; 2) In March, the epidemic situation in some areas repeatedly stimulated home consumption; 3) The marginal improvement after the simplification and adjustment of dealer system in 21 years. In terms of products, the income of 22q1 hot pot seasoning / Chinese compound seasoning / sausage bacon seasoning / chicken essence / spicy sauce was - 3% / + 45% / - 35% / + 87% / + 35% year-on-year respectively. Hot pot seasoning and sausage bacon seasoning were mainly dragged down by the high base. In terms of subregions, the revenue of 22q1 Southwest / central / East China was + 18% / 21% / 21% year-on-year, and the recovery of key markets was the main reason for the overall improvement, while the revenue of Northwest / North / Northeast / South China was + 24% / 43% / - 8% / + 22% year-on-year. In terms of channels, the super revenue of direct business in 22q1 was + 91% year-on-year, which is expected to be mainly due to the weakening of the impact margin of community group purchase, and the revenue of customized meal adjustment was + 13% year-on-year, which still achieved steady growth under the background of high base. In addition, the distribution channels recovered significantly, the revenue of 22q1 was + 23% year-on-year, and the number of dealers was 3368, month on month - 1%. It is mainly due to the adjustment of northeast and central China markets, but the channel network encryption is still being carried out in the core Market.
The slowdown of competition and the reduction of expenses have led to the improvement of profitability. Gross profit margin: 22q1 was 36.0%, with a year-on-year increase of -1.7pct, mainly because the cost pressure of edible oil and pepper continued to highlight, but the decline was smaller than that of 21q4. Although the company raised the price of a few products in November, it was difficult to fully hedge. Expense ratio: in 2021, the sales expense ratio was 13.0%, with a year-on-year increase of -4.9pct. On the one hand, the competitive edge slowed down, and the company reduced the terminal promotion investment. On the other hand, the company changed its strategy of high-profile promotion for 21 years and began to reduce the online expense investment, focusing on improving the expense efficiency. Net interest rate: it was 15.9% in 2021, with a year-on-year increase of + 0.6pct, mainly due to the price increase of a small number of products + active cost reduction to hedge cost pressure, and the bottom improved significantly.
The trend of multiple factors is good, and the performance of 22q1 is the verification signal. It returns to steady growth in 2022. 1) The terminal demand was repaired steadily and the company's channel inventory remained low; 2) The adjustment of internal product cycle and organizational structure is coming to an end; 3) The cost may drop gradually at a high level of 22h2, and the price increase effect is expected to be fully released; 4) The base is low, leaving room for growth. To sum up, we believe that the continuous improvement of the company's fundamentals in 2022 is a high probability event.
Investment suggestion: it is estimated that the net profit attributable to the parent company from 2022 to 2024 will be RMB 275 / 352 / 430 million, with a year-on-year increase of + 48.8% / 28.3% / 22.2%. The corresponding PE of the stock price is 45 / 35 / 29x. The PE of the company in 2022 is higher than the average level of the condiment industry of 39x (wind unanimously expected), so it is rated as "prudent recommendation".
Risk tips: the terminal dynamic sales are less than expected, the cost investment is more than expected, food safety problems, etc.
