\u3000\u3 Shengda Resources Co.Ltd(000603) 027 Qianhe Condiment And Food Co.Ltd(603027) )
Event: on April 27, 2022, Qianhe Condiment And Food Co.Ltd(603027) released the annual report of 2021 and the first quarterly report of 2022. In 2021, the company achieved operating revenue / net profit attributable to parent company of RMB 1.93/220 billion, a year-on-year increase of + 13.7% / + 7.6%. In 2022q1, the company achieved revenue / net profit attributable to the parent company of RMB 480 million / 60 million, a year-on-year increase of + 0.9% / + 38.5%.
In the past 21 years, condiments grew steadily and channels were expanded continuously.
In 2021, the condiment business realized an operating revenue of 1.9 billion yuan, a year-on-year increase of 13.7%. 1) In terms of products, the company's soy sauce / vinegar business achieved an operating revenue of 1.18/320 billion yuan in 2021, a year-on-year increase of + 12.2% / + 10.0%; The sales volume of soy sauce / vinegar business was 264 / 94000 tons respectively, with a year-on-year increase of + 30.2% / + 13.5%. 2) In terms of regions, the Eastern / Southern / central / northern / western regions achieved operating revenue of RMB 390 / 1.2 / 1.8 / 270 / 940 million respectively, with a year-on-year increase of + 17.3% / + 51.7% / + 29.4% / + 10.5% / + 7.3% respectively. By the end of 2021, the number of distributors of the company had reached 1791, with a net increase of 387 in the whole year of 21, including a net increase of 63 in the fourth quarter. 3) In terms of sales mode, the company's distribution / direct sales achieved an operating revenue of 1.26/640 billion yuan, a year-on-year increase of + 12.7% / + 15.8%, and the proportion of distribution decreased by 0.9pct to 66.2%.
22q1 condiment business achieved an operating revenue of 480 million yuan, a year-on-year increase of 0.9%. (1) By product, the soy sauce / vinegar business of 22q1 company achieved an operating revenue of 290 million yuan / 78.87 million yuan, a year-on-year increase of - 1.3% / 2.6%. (2) In terms of regions, the Eastern / Southern / central / northern / western regions achieved operating revenue of 84.92 million yuan / 26.82 million yuan / 42.79 million yuan / 71.63 million yuan / 250 million yuan respectively, with a year-on-year increase of - 8.0% / - 3.1% / + 12.6% / + 15.7% / + 1.0% respectively. By the end of the first quarter of the year, the number of distributors of the company had increased by 108 to 1899. (3) In terms of sales mode, the company's distribution / direct sales achieved an operating revenue of RMB 330 / 150 million, a year-on-year increase of + 3.1% / - 0.7%.
Cost contraction offsets the pressure of rising costs.
1) in 2021, the company's comprehensive gross profit margin was 40.4%, year-on-year -3.5pct. According to products, the gross profit margin of soy sauce / vinegar was 43.9% / 37.9% respectively, and the gross profit margin was -4.4 / - 4.0pcts year-on-year. 22q1 company's comprehensive gross profit margin was 35.0%, a year-on-year increase of -8.4pcts. The decrease in gross profit margin was mainly due to the increase in the purchase cost of main raw materials and freight during the reporting period. 2) In 2021, the annual / 22q1 sales expense ratio was 20.2% / 15.1%, with a year-on-year increase of + 3.2 / - 10.6pcts, which increased significantly in 21 years, mainly due to the increase of TV advertising expenses invested by the company during the reporting period. Among them, the salary, promotion and advertising expenses and travel expenses increased by - 16.1% / + 123.2% / + 28.8% year-on-year. The promotion and advertising expenses increased the most, mainly due to the advertising expenses of the company named Jiangsu Satellite TV's "new blind date conference column" to strengthen brand publicity. 3) For the whole year of 2021 / 22q1, the management expense rate of the company was 3.4% / 3.3%, with a year-on-year rate of -0.25 / + 0.03pcts. 4) Overall, the net profit margin of the company's sales in 2021 / 22q1 was 11.5% / 11.5% respectively, with a year-on-year increase of - 0.7 / + 3.1pcts.
Short term demand and cost are still under pressure, and we will continue to focus on the development of circulation channels.
In terms of subregions, the performance of 22q1 in East China is weak, which is expected to be affected by the adjustment of the company's dealers in East China (Rongjin gives up some channels) and the repeated epidemic in East China. In addition, due to the company's long soy sauce fermentation cycle and the pressure brought by the upward price of soybeans, the price of packaging has increased more since this year, and the cost side is expected to be under pressure in the short term. This year, the company will expand the circulation market in other cities, and seize the market through low-cost version of zero added soy sauce + high fresh soy sauce. In the follow-up, we need to focus on the development of the company's circulation channels and the promotion of low-cost zero addition soy sauce.
Profit forecast, valuation and rating: considering that the demand for condiments is still weak, the soy sauce brewing cycle of the company is long, and the cost pressure moves backward, the forecast of the company's net profit attributable to the parent company in 202223 is lowered to 245 million yuan / 299 million yuan (20.9% / 27.2% respectively), and the forecast of net profit attributable to the parent company in 2024 is introduced to 369 million yuan, equivalent to 0.31/0.37/0.46 yuan of EPS in 202224 respectively. The current share price is 59x / 48x / 39x corresponding to PE in 2022 / 23 / 24, maintaining the rating of "overweight".
Risk warning: food safety risk and rising price of raw materials.
