\u3000\u3 Shengda Resources Co.Ltd(000603) 517 Juewei Food Co.Ltd(603517) )
Event: the company announced that in 2021, it achieved an operating revenue of 6.549 billion yuan, a year-on-year increase of + 24.12%; The net profit attributable to the parent company was 981 million yuan, a year-on-year increase of + 39.86%. In 2022q1, the operating revenue was 1.688 billion yuan, a year-on-year increase of + 12.09%; The net profit attributable to the parent company was 89 million yuan, with a year-on-year increase of – 62.24% and – 64.73%.
The growth of operating revenue is in line with expectations, and the quality of life of franchise stores is guaranteed. In terms of products, the income of fresh products was 5.61 billion yuan, a year-on-year increase of + 15.5%, of which the income of Poultry / livestock / vegetables / other products was 43.3/0.7/6.1/590 million yuan, a year-on-year increase of 13% / 115% / 16% / 29% respectively. The sales volume of fresh products was 481000 tons, a year-on-year increase of 12.3%. By the end of 2021, the company had 13714 stores, with a net increase of 1315 in 2021. 68% of the stores are over 2 years old. From the perspective of channel composition, the proportion of revenue contribution and quantity composition of stores in street, community and other scenes that are relatively less affected by the epidemic reaches two-thirds; In 2021, the single store revenue of stores older than 2 years increased by 20% – 29% year-on-year, and the single store revenue of stores older than 1 year increased by nearly 10% year-on-year; Only the single stores with store age less than 1 year were flat year-on-year, and the revenue of single stores in stock stores increased positively with store age.
Sales expenses increased significantly. In 2021, affected by the rise of raw materials, the operating cost of the company increased by 27.5% year-on-year, exceeding the growth rate of revenue, and the gross profit margin decreased by 1.8pct to 31.7%. Among them, the gross profit margin of Poultry / livestock / vegetables / other products was 36.2% / 4.6% / 26.0% / 32.1% respectively, and the gross profit margin of livestock products decreased significantly by 9.9pct. The sales expenses increased significantly. In 2021, the sales expenses increased by 62.8% year-on-year, and the sales expense rate increased by 1.9pct to 8.0%. In 2021q4, the gross profit margin decreased to 26.3%. In January 2022, due to the price increase of the whole product line, the gross profit margin in Q1 rebounded to 30.3%, the sales expense increased by 135% year-on-year, and the sales expense rate was 14%, year-on-year + 7.3pct. The substantial increase in sales expenses is mainly due to 1) the discount subsidy for the original stores (i.e. the discount on the original purchase price); 2) Subsidies for opening new stores, such as purchase subsidies and decoration subsidies; 3) Increased marketing expenses; 4) Increase in employee compensation. In 2021, the management expense rate increased slightly by 0.1pct to 6.4%, and in 2022q1, it was 6.96%. In 2021, the net interest rate increased by 1.7pct to 15.0%, the net profit attributable to the parent company in 2021q4 was 17 million yuan, a year-on-year increase of – 90.71%, the net interest rate attributable to the parent company was 0.99%, and the net interest rate attributable to the parent company in 2022q1 rebounded to 5.3%.
Investment suggestion: the company has established a franchise system of “chain franchise, all walks of life to reach far” to advance and retreat with franchisees. If the epidemic situation improves in the future, franchisees are expected to radiate vitality. Continue to maintain the Buy-A rating. It is estimated that the company’s earnings per share from 2022 to 2024 will be 1.87/2.13/2.50 yuan, and the 12-month target price will be 57.53 yuan, equivalent to 27x P / E ratio in 2022.
Risk tip: opening a store with encryption may affect the income of the same store, and the performance of the invested enterprise is less than expected.
