\u3000\u3 China Vanke Co.Ltd(000002) 507 Chongqing Fuling Zhacai Group Co.Ltd(002507) )
Event:
Chongqing Fuling Zhacai Group Co.Ltd(002507) released the first quarter report of 2022: in the first quarter, the revenue was 689 million yuan, a year-on-year decrease of 2.88%, the net profit attributable to the parent was 214 million yuan, a year-on-year increase of 5.39%, and the non net profit deducted was 195 million yuan, a year-on-year decrease of 3.08%.
Key investment points:
Under the pressure of high base, Q1 performance is still relatively stable, which is in line with expectations as a whole. The company’s Q1 revenue declined slightly, which was in line with previous expectations, mainly considering: 1) after the price increase of Q4 last year, the channel stock was active, and the growth rate of Q4 revenue reached 18.74%. There was a certain inventory digestion period after the price increase. 2) The growth rate of the company’s credit line for new products was increased by 46.86% in the last three quarters, which was the highest in the last year’s Spring Festival, with the highest growth rate of the company’s credit line for customers in the past three years. However, since Q4 company raised the price of the whole series of products by 3% – 19% last year, the price increase has made a great contribution to the income growth. At the same time, after entering March, driven by the outbreak of the epidemic in many places, the home consumption scene increased, which stimulated the sales volume to resume growth in March, ensuring that the Q1 performance is still relatively stable. Q1 net operating cash flow increased by 535.74% year-on-year, mainly due to the increase in payment received, the increase in contract liabilities by 28.3% year-on-year, and the decrease in the purchase price of main raw materials qingcaitou this year, resulting in a decrease in the purchase price of raw materials.
Q1 advertising expenses decreased, and the net interest rate increased significantly. The gross profit margin of Q1 company was 52.37%, a year-on-year decrease of 7.70pct, mainly due to the use of last year’s high price green vegetable head inventory in the first quarter. Q1 net profit margin increased by 2.44pct to 31.11%. First, the company increased its investment in brand publicity last year. Most of the expenses were confirmed in Q1 last year. This year, Q1 advertising is more concentrated in the direction of local promotion and Internet. The expenses shrink significantly, and the sales expense rate decreased by 6.30pct to 17.87% year-on-year. Second, the income from fixed increase fund financing also contributed to the growth of net interest rate, and the financial expense rate decreased by 1.76pct to – 3.72% year-on-year.
Epidemic catalysis + cost reduction + cost contraction, and the annual performance is expected to usher in elastic growth. Looking forward to the whole year, the company will increase the price and increase the channel profit, with high channel enthusiasm. This year, the company will launch new packaged products with 30% salt reduction. At the same time, it will actively promote the sinking of channels and the development of b-end channels. It is expected that the terminal dynamic sales will remain good. This year, due to the repeated outbreak of the epidemic and the implementation of the city closure policy in many places, consumers’ cooking time at home has increased, and the demand for mustard, radish and other meals has increased. It is expected that the company’s annual revenue target of 15% will be achieved. In terms of profit, the purchase price of green vegetables will fall back to about 800 yuan (about 1300 yuan last year), and the comprehensive gross profit will be effectively improved, which is expected to be obvious in the second half of the year. In addition, this year, the company’s brand publicity expenses will be more accurate, the investment intensity is expected to decrease year-on-year, and the certainty of annual profit elasticity growth is high.
Profit forecast and investment rating. Considering that the epidemic situation stimulates the growth of sales volume of food products such as pickled mustard, and under the resonance of multiple factors such as price increase, reduction of raw material cost and reduction of publicity expenses, the company’s performance is expected to usher in elastic growth in 2022. We expect the company’s EPS to be 1.08/1.18/1.28 yuan / share from 2022 to 2024, and the corresponding PE to be 33 / 30 / 28 times respectively, giving a “overweight” rating.
Risk tips: 1) low downstream demand; 2) The movable pin of the terminal is not as expected; 3) Food safety issues; 4) The promotion of new products is less than expected; 5) The production capacity was lower than expected.
