\u3000\u3 Shengda Resources Co.Ltd(000603) 755 Qingdao Richen Food Co.Ltd(603755) )
Events
On the evening of April 26, 2022, the company released the 2021 annual report and the first quarterly report of 2022: in 2021, the company achieved a revenue of 339 million yuan (+ 28.57%), a net profit attributable to the parent company of 81 million yuan (+ 0.05%), and a net profit not attributable to the parent company of 69 million yuan (- 10.11%); 2022q1 revenue of 75 million yuan (+ 7.11%); The net profit attributable to the parent company is 14 million yuan (- 7.51%), and the non net profit deducted is 11 million yuan (- 4.48%).
Key investment points
The epidemic has been disturbed for a short time, and the profit side continues to be under pressure
According to the annual report, the revenue of 2021q4 is 98 million yuan (24.25%), the net profit attributable to the parent company is 25 million yuan (+ 13.50%), and the net profit not attributable to the parent company is 18 million yuan (- 9.85%).
In 2021, the company’s gross profit margin was 43.42% (- 3.45pct) and that in 2021q4 was 43.48% (+ 2.07pct). The annual decline was mainly due to the rise of raw material costs. The ratio of sales expenses / administrative expenses / financial expenses in 2021 is 6.20% / 12.23% / – 0.05%, with a year-on-year increase of + 1.25 / + 0.51 / + 4.80pct. The increase of sales expense rate is mainly due to the increase of labor salary, office travel expenses and product promotion investment due to the reform of salary system, the increase of sales personnel and other factors; The increase of management fee rate is mainly due to the reform of salary system, investment in information construction, cancellation of social security exemption and discount, etc; The change of financial expense rate is mainly due to the classification of structural deposits whose income is linked to interest rate and index as “trading financial assets”, and their income is included in “investment income”. The net profit margin in 2021 was 24.01% (-6.85pct) and that in 2021q4 was 25.13% (-2.38pct), mainly due to the decline of gross profit margin and the increase of period expenses.
The gross profit margin of 2022q1 company is 39.43% (-7.20pct), which is expected to be mainly due to the continuous rise of raw material prices. The ratio of sales expenses / administrative expenses / financial expenses is 6.23% / 14.74% / 0.59%, respectively – 0.04 / – 1.48 / + 1.34pct year-on-year. The ratio of sales expenses is basically the same. The decrease of the ratio of administrative expenses is expected to be mainly due to the payment of the year-end bonus accrued at the end of the previous year, and the change of the ratio of financial expenses is mainly due to the increase of bank loans. The net profit margin of 2022q1 was 18.21% (-2.88pct), mainly due to the decline of gross profit margin.
The volume and price of core products rose simultaneously, with significant growth in South China
By product, in 2021, the revenue of sauce condiments / powder condiments / food additives was 250 / 82 / 05 million yuan respectively, with a year-on-year increase of + 29.09% / + 28.29% / + 11.60% respectively. In 2022q1, the revenue of sauce condiments / powder condiments / food additives was 55 / 18 / 01 million yuan respectively, with a year-on-year increase of + 8.40% / + 1.03% / + 59.30% respectively.
In terms of component price, in 2021, the sales volume of sauce seasoning / powder seasoning was 15400 / 5700 tons, with a year-on-year increase of + 27.75% / + 23.02%, and the ton price was 1.6314400 yuan / ton, with a year-on-year increase of + 1.05% / + 4.28%. The sales volume of food additives is 133 tons (+ 4.65%), and the corresponding ton price is 41300 yuan / ton (+ 6.64%).
By region, the revenue of East China / North China / Northeast China / Central China / South China in 2021 was RMB 232.61/0.19/0.10/0.12 million, a year-on-year increase of + 36.82% / + 7.09% / – 1.19% / + 38.69% / + 86.27%. In 2022q1, the revenue of East China / North China / Northeast China / Central China / South China was RMB 53 / 0.12/0.04/0.02/03 million, a year-on-year increase of + 24.32% / – 27.87% / + 12.13% / – 49.43% / + 56.35%.
By channel, in 2021, the revenue of direct catering / direct food processing / direct brand customization / direct e-commerce / direct supermarket / dealers was 14650 / 14370 / 3829 / 154 / 152 / 6780000 yuan respectively, with a year-on-year increase of + 32.67% / + 22.10% / + 47.87% / – 49.80% / – 51.22% / + 129.30%. 2022q1 direct catering / direct food processing / direct brand customization / direct e-commerce / direct supermarket / dealer revenue was 2769 / 3070 / 1326 / 24 / 60 / 2.1 million yuan respectively, with a year-on-year increase of -11.42% / + 9.59% / + 60.07% / – 29.92% / + 18.21% / + 76.32% respectively. In 2021, there was a net increase of 387 to 1791 dealers. By the end of Q1 in 2022, there were 1899 dealers, with a net increase of 108. The number of dealers of 2021 company was 63, with a net increase of 11. At the end of 2022q1, the number of dealers of the company was 42, with a net decrease of 21.
Incentive optimization, expected to grow rapidly in 2022
According to the objectives of the company’s equity incentive plan, the revenue or net profit in 2022 will be the same as + 30%. The company’s development plan in 2022 is as follows:
1) marketing: by improving the network layout of China’s marketing headquarters, regional marketing centers and marketing offices, some key cities in China will build a new regional marketing experience center – future kitchen. In 2022, the company will focus on promoting the construction project of Shanghai marketing center, accelerate the progress of the project, and accelerate the completion of the market layout of the Yangtze River Delta centered on Shanghai with the support of Shanghai marketing center.
2) management: by launching SAP cloud ERP project, the company will continue to promote industrial digital upgrading and improve the digital degree of production, operation and management in 2022.
3) capacity: at present, the total capacity is about 20000 tons, and the new capacity is expected to reach the capacity in 2023. At that time, the total capacity of the company will reach about 37000 tons.
4) incentive: improve the incentive measures. The equity incentive plan launched in October 2021 will greatly mobilize the work enthusiasm of the company’s middle and senior managers and core backbone personnel.
Profit forecast
We believe that the compound condiment industry has broad space and rapid development, and is expected to maintain double-digit growth. The company focuses on customized meal adjustment. With the mitigation of the epidemic, the recovery of catering consumption and the continuous improvement of the company’s marketing and management, it is expected to achieve rapid growth in 2022. We expect that the EPS from 2022 to 2024 will be 1.10/1.44/1.88 yuan, and the current share price corresponding to PE will be 30, 23 and 18 times respectively. It will be covered for the first time and given a “recommended” investment rating.
Risk tips
Macroeconomic downside risks, consumption dragged down by the epidemic, intensified industrial competition, less than expected regional expansion, less than expected capacity construction or utilization, less than expected marketing promotion, etc.
