\u3000\u3 Shengda Resources Co.Ltd(000603) 317 Sichuan Teway Food Group Co.Ltd(603317) )
Key investment points
Event: the company released the first quarterly report of 2022, realizing a revenue of 630 million yuan, a year-on-year increase of 20.6%; The net profit attributable to the parent company was 100 million yuan, an increase of 25.3% year-on-year; The net profit deducted from non parent company was 98 million yuan, with a year-on-year increase of 27.3%, exceeding market expectations.
Sichuan’s business expansion is progressing smoothly across the country. In terms of products, the two core categories of 22q1 company, hot pot seasoning and chuandiao, achieved revenue of 2.5% respectively 400 million yuan / 350 million yuan, with a year-on-year growth rate of – 3.2% / + 45% respectively; The base material is subject to the higher base of promotion in the same period last year, and the growth rate has decreased slightly; Thanks to the preparation of crayfish seasoning in advance, the business of Sichuan dispatching has achieved high growth. The growth rate of winter adjustment income was – 35.3%, mainly due to the premise of earlier goods preparation time in the Spring Festival. Chicken essence / spicy sauce business performed well, with a year-on-year increase of + 87.3% / + 35.4% respectively, mainly benefiting from the high inventory base in the same period last year. By channel, the distribution / customized meal adjustment / e-commerce channels were + 23.4% / + 12.9% / – 20.2% year-on-year respectively; Affected by the frequent epidemic in China, the consumption of catering end is damaged and the logistics delivery is limited, and the growth rate of customized meal adjustment and e-commerce has declined. In terms of regions, the income of the company’s headquarters in Southwest China was + 17.8% year-on-year; All other regions in the country achieved a growth rate of more than 20%, of which North China’s revenue showed a bright performance, with a year-on-year increase of + 43.1%; Affected by the decrease of dealers and the epidemic, the revenue in Northeast China was – 8.5% year-on-year. During the reporting period, the number of dealers of the company decreased by 41 to 3368 compared with the beginning of the year. The company actively optimized the dealer structure and steadily built a nationwide channel network.
Cost pressure suppresses gross profit, reduces fees and improves efficiency, and improves Q1 profit. 22in Q1, the company’s gross profit margin was 32.2%, a year-on-year decrease of 1.7pp. The pressure on gross profit margin is mainly due to the rise in the prices of raw materials such as pepper and oil; In addition, compared with the same period last year, the company reduced the intensity of buying gifts, which can also partially alleviate the decline of gross profit margin. In terms of expenses, the sales expense rate of 22q1 was 13%, a year-on-year decrease of 4.9pp; In addition to the change of accounting standards and the inclusion of freight into operating costs, the company took the initiative to reduce the investment of online advertising expenses, resulting in the obvious optimization of sales rates. The rate of administrative expenses remained stable, with a year-on-year decrease of 0.2pp to 3.4%. Under the continuous pressure on the cost side, the company boosted Q1 net profit margin by 0.6pp to 15.5% year-on-year by optimizing the use efficiency of sales expenses 9%。
The implementation of reform releases kinetic energy, and the improvement of fundamentals is expected. 1) In terms of internal management mechanism, the company has promoted flat management since 21q3, optimized the internal organizational structure, set up Marketing Committee, product management group and other departments, and continuously improved the efficiency of internal management. 2) In terms of channels, based on the existing dealers, the company launched a hierarchical business model of excellent business and supporting business, continued to promote the refined management of channels and optimize the efficiency of channel operation. 3) In terms of products, Dahongpao vigorously develops small b-end business on the basis of C-end, and strengthens the cultivation of large single products of haorenjia brand. 4) The company launched a new round of equity incentive scheme, which expanded the incentive scope and reduced the difficulty compared with the previous one, which is conducive to fully mobilize the overall enthusiasm of the team. In the future, the polyphonic industry will grow steadily at a high speed of more than double digits, and small and medium-sized brands in the industry have accelerated their exit due to factors such as high costs and weak consumption in 21 years. As the leader of Sichuan flavor polyphony industry, the company’s business performance in 22 years is expected to rise steadily.
Profit forecast and investment suggestions. It is estimated that the EPS from 2022 to 2024 will be 0.32 yuan, 0.43 yuan and 0.56 yuan respectively, and the corresponding dynamic PE will be 56 times, 42 times and 33 times respectively, maintaining the “buy” rating.
Risk tips: the risk of price fluctuation of raw materials, the risk of repeated covid-19 epidemic, and the risk of deterioration of market competition pattern.
