\u3000\u3 China Vanke Co.Ltd(000002) 507 Chongqing Fuling Zhacai Group Co.Ltd(002507) )
The company announced the first quarterly report of 2022: mustard 2022q1 achieved a revenue of 690 million yuan, a year-on-year increase of – 2.9%; The net profit attributable to the parent company was 210 million yuan, a year-on-year increase of + 5.4%; The net profit deducted from non parent company was 195 million, a year-on-year increase of – 3.1%.
Direct price increases contributed to core growth, and mobile sales improved month by month. Since the company raised the price of main products in 2021q4 (with an average range of 14%), it can be estimated that the sales volume of 1q22 decreased by nearly 15% year-on-year. The decline in sales volume is mainly due to: 1) the positive preparation of 1q21 channels and terminals, resulting in a high base; 2) The price increase affects the short-term dynamic sales in the transmission process. However, with the gradual and smooth transmission of the price increase to the terminal and the strong demand for hoarding by residents in areas with serious epidemic in March, the sales growth rate of the company in March has turned positive, and the dynamic sales have recovered month by month, which is significantly better than expected.
The expense contraction was superimposed with the increase of financial management income, and the net interest rate of Q1 was restored to 30% +. 1q22’s gross profit margin fell by 7.7pct to 52.0% year-on-year. If the freight is restored to a comparable standard, the gross profit margin is – 4.1pct year-on-year, mainly because 1q22 is still using the green vegetable head purchased at a high price last year; 1q22 company’s sales expense ratio fell 6.3pct to 19.0% year-on-year. If the freight is restored to a comparable standard, the sales expense ratio is -2.7pct year-on-year, mainly due to the contraction of advertising expenses. 1q22 company’s financial expense ratio decreased by 0.2pct to 0.1% year-on-year, mainly due to the increase of financial income. Under the combined influence of the above factors, the company’s net profit margin increased by 2.4pct to 31.3% year-on-year.
Benefiting from the price increase and the decline in the procurement cost of green vegetables, the performance of pickled mustard in 2022 is expected to accelerate. In addition to the income increment contributed by the price increase, due to the repeated epidemic, the benefit of the company’s dynamic sales + the reduction of consumer price sensitivity during goods hoarding + the general increase of food prices, the company’s sales volume is expected to achieve positive growth in 2022 and usher in the double rise of volume and price. On the cost side, due to the year-on-year decline of about 36% in the purchase price of qingcaitou, it is expected that the gross profit margin of the company will be greatly improved (the gross profit margin will be increased by 6pct under the neutral assumption). Considering the use time lag after qingcaitou purchase, the improvement of gross profit margin caused by the decrease of purchase cost will be reflected on the report end in 2q22. On the cost side, it is expected that the cost investment will become more rational in 2022, the marginal sales cost rate will decline, and the cost structure will be optimized (push to increase + shrink advertising investment). Under the joint influence of the above factors, the company’s performance in 2022 is expected to accelerate the release. Considering the low base of 2q21-3q21, the growth rate of 2q22-3q22 performance is higher and shows a quarterly improvement trend.
Risk tips: the channel sinking progress is less than expected, food safety risks, weak industry demand, etc.
Investment suggestion: the price increase superimposes the cost downward, the performance flexibility in 2022 is expected, and the “buy” rating is maintained. Considering the smooth transmission of the company’s price increase and the decline of the annual expense rate, we raised the previous profit forecast and estimated that the net profit attributable to the parent company from 2022 to 2024 was RMB 990 / 12.7 / 1.53 billion (the previous time was RMB 980 / 12.4 / 1.49 billion), an increase of 33% / 29% / 20% year-on-year; The corresponding PE of the current stock price is 35 / 27 / 23x respectively. In the short term, the direct price increase at the end of last year combined with the downward purchase cost of green vegetables is expected to fully release the profit elasticity of the company in 2022. The company’s long-term competitive advantage will be maintained and the company’s long-term competitive advantage will be maintained
