\u3000\u3 Ping An Bank Co.Ltd(000001) 215 Zhengzhou Qianweiyangchu Food Co.Ltd(001215) )
Ping An View:
With the professional gene of missing, deeply cultivate the catering quick-frozen noodle rice market Zhengzhou Qianweiyangchu Food Co.Ltd(001215) was born out of missing. Adhering to the strategic positioning of “only for catering and chefs”, Zhengzhou Qianweiyangchu Food Co.Ltd(001215) is committed to providing customized and standardized quick-frozen food and related catering kitchen solutions for catering enterprises. The company has become a supplier of quick-frozen noodles and rice products for well-known catering chains such as KFC, pizza hut, Wallace, Haidilao and zhenkung Fu. Among them, the supplier system in Yum China is the highest T1 level, leading other competitors in the industry.
Scene oriented, mining large single product space, expanding category logic and continuous verification. As the leader in the subdivided field of industrialized fried dough sticks, the company has a market share of more than 30%, and continues to dig around the scene to consolidate its position in the industry. Since 2012, the company has begun to study the possible sub scenarios of fried dough sticks to carry out the research and development of new fried dough sticks products. At present, it has launched a variety of fried dough sticks products around the six scenarios of hot pot, fast food, buffet, banquet, breakfast and takeout. In addition, the company has rich product reserves and plans, and continues to cultivate new large single products such as steamed and fried dumplings. The expansion of categories is expected to bring a new growth pole.
Big B drives new product R & D, strengthens R & D ability and builds a moat Zhengzhou Qianweiyangchu Food Co.Ltd(001215) has 49 patents, which is far ahead of the industry. In 2014, it took the lead in establishing a “simulated restaurant back kitchen” R & D laboratory in the industry, so as to find the pain points in the cooking process of catering enterprises and provide solutions more accurately. The R & D of characteristic products is mainly driven by big B customers, but the growth of customized products is limited by the demand ceiling of a single customer. Therefore, in the later stage, the company decides whether to transform it into a general product for small B catering, which can greatly save the R & D cost of the company and improve the launch efficiency of new products through large-scale production of general products.
Direct marketing is the cornerstone, and the lighthouse effect helps customers expand. Relying on the first mover advantage, the company is deeply bound with the head catering chain enterprises, and the high customer stickiness brings high business stability. The top five direct customers contribute more than 30% of the revenue. In 2020, impacted by covid-19 epidemic, the proportion of revenue from Yum China, the largest customer, decreased to 23.4%, while the sales of Wallace / Haidilao, the company’s second / third largest customer, accounted for 4% / 2% respectively. With the continuous volume of single products and the launch of new products, we expect the sales volume of the two customers to continue to increase. In addition, the company continues to expand large B customers in new areas of catering, bringing continuous increment to the company’s future business development.
Strengthen the management of distribution channels and expand the growth space. In terms of small B channel construction, firstly, the company will cultivate dealers in a planned way, improve the sales of individual dealers and create more dealers with sales of more than one million. It is expected to cultivate 20% of the top dealers in two years and complete the cultivation of dealers above the waist within five years, so as to open up the space for upward revenue growth. In addition, the company empowers dealers by increasing sales personnel, rebate policies and other ways. We believe that with the company’s increasing dealer development efforts, the number and quality of dealers will be greatly improved, and the company’s distribution channel revenue may maintain a high growth rate.
Investment suggestion: as the leader of the b-end of quick-frozen noodles and rice products, the company has both certainty and growth. We estimate that the company’s operating revenue from 2021 to 2023 will be 1.275, 1.630 and 2.016 billion yuan, and the net profit attributable to the parent company will be 87, 107 and 131 million yuan. The corresponding EPS is 1.01, 1.24 and 1.51 yuan respectively. The current share price is 44.9, 36.6 and 30.1 times of PE from 2021 to 2023. It is covered for the first time and given a “recommended” rating.
Risk tips: 1) food safety risk: there are many links in the production and circulation of quick-frozen food produced by the company. If there are food safety problems, it may have a significant adverse impact on the company’s reputation and business operation. 2) The recovery of catering industry is not as expected: the epidemic has led to the decline of consumption capacity and demand, which has a great impact on the catering industry. The recovery of catering industry still faces many challenges, and the pace of recovery is uncertain. 3) Key customer risk: the company’s key customers account for a relatively high proportion, among which Yum China and its related parties account for more than 20% of the company’s revenue. The business risk of key customers indirectly affects the company’s sales to key customers. 4) Intensified industry competition: with the continuous expansion of the market capacity of the catering supply chain, or other potential competitors entering the industry, there is a risk of intensified market competition. 5) Risk of price fluctuation of raw materials: the main raw materials required by the company’s production are flour, edible oil and other bulk Shenzhen Agricultural Products Group Co.Ltd(000061) , and the cost of raw materials accounts for about 75% of the operating cost. The price fluctuation of raw materials may affect the profitability of the company.
