\u3000\u3 China Vanke Co.Ltd(000002) 507 Chongqing Fuling Zhacai Group Co.Ltd(002507) )
Event: on April 27, 2022, Chongqing Fuling Zhacai Group Co.Ltd(002507) released the first quarterly report of 2022, and the company realized an operating revenue of 689 million yuan in 2022q1, a year-on-year increase of – 2.88%; The net profit attributable to the parent company was 214 million yuan, a year-on-year increase of + 5.39%, and the performance was in line with market expectations.
Revenue declined slightly in the first quarter, and the epidemic helped the inventory of digestive channels. 22q1’s revenue was – 2.88% year-on-year, in line with market expectations. The main reasons for the decline of income are as follows: 1) the spring festival goods preparation is carried out in advance; 2) At the end of the 21st century, the company raised the price, which caused a certain disturbance to the demand under the weak consumption environment. According to the channel tracking, the overall pressure of the company’s transfer volume from January to February was high. However, with the multi-point spread of the epidemic in March, the consumption scene of residents at home increased, and the residents’ consumption demand for pickled mustard and the dealers’ willingness to store goods increased. The transfer volume in March showed a double-digit growth, driving the 22q1 transfer volume to be basically the same as that in the same period. At the end of March, the dealers’ inventory also rose to above the safety inventory month on month. Consumer demand was further strengthened in April, and the year-on-year growth rate of goods transfer is expected to be higher than that in March. The reasons are as follows: 1) the company enters the list of guaranteed supply and increases consumption scenarios; 2) Reduce the impact of logistics distribution in Shanghai as much as possible through measures such as increasing logistics costs and applying for passes; 3) Actively carry out group buying. According to the channel tracking, the dealer’s inventory fell to within the safety stock month on month in April.
Cost contraction and investment income thickening profit: 1) gross profit margin: the company’s 22q1 gross profit margin was 52.37%, year-on-year -7.70pcts, mainly due to the high price green vegetable head that the company was still using for 21 years in the first quarter. 2) Sales expense ratio: the company’s 22q1 sales expense ratio was 17.87%, with a year-on-year increase of -6.30pcts, mainly due to the reduction of advertising expenses. 3) Management expense ratio: the company’s 22q1 management expense ratio was 3.19%, with a year-on-year increase of + 1.08pcts, mainly due to the increase of employee salary and amortization of intangible assets in the first quarter. 4) Financial expense ratio: the company’s 22q1 financial expense ratio was -3.72%, with a year-on-year increase of -1.76pcts, mainly due to the increase of interest income from cash management. 5) Investment income: the investment income of 22q1 increased by 21 million yuan, which is mainly the income generated by the company using some idle raised funds to buy financial products. 5) Net interest rate: Overall, the company’s 22q1 net interest rate was 31.11%, year-on-year + 2.44cpts.
Price increases add up to lower costs, shrinking expenses and large profit elasticity. The average price increase of 12% – 14% at the end of the year 21 provides effective support for 22-year income and gross profit margin. The profit growth rate in 22 years is expected to be greater than the revenue growth, which has a high elastic space. This year, the purchase price of qingcaitou has decreased from 1100 yuan / ton in the early stage to 800 yuan / ton this year (this year’s low-cost qingcaitou will be used at the end of April). The cost pressure is significantly downward + the cost investment is narrowed, which brings space for the release of profits.
Profit forecast, valuation and rating: we maintain that the net profit attributable to the parent company from 2022 to 2024 is RMB 996 / 1170 / 1289 million respectively, equivalent to EPS of RMB 1.12/1.32/1.45 respectively from 2022 to 2024. The current share price corresponds to PE of 31x / 27x / 24x respectively from 2022 to 2024, maintaining the “buy” rating.
Risk tip: raw material price fluctuation risk, industry competition is higher than expected.
