\u3000\u3 China Vanke Co.Ltd(000002) 507 Chongqing Fuling Zhacai Group Co.Ltd(002507) )
Events
On the evening of April 27, 2022, the company released the first quarterly report of 2022: the revenue of 2022q1 was 688 million yuan (- 2.88%), and the net profit attributable to the parent company was 214 million yuan (+ 5.39%); Deduct non net profit of RMB 194 million (- 3.08%).
Key investment points
The performance in the first quarter was in line with expectations, and the cost contraction released the profit elasticity
The performance in the first quarter basically met our previous expectations. In the first quarter of 2022, the company obtained a return of RMB 21.02 million from entrusted investment or asset management, resulting in a difference in the year-on-year growth rate of net profit attributable to parent company and net profit deducted from non parent company.
The gross profit margin of Q1 in 2022 is 52.37% (-7.70pct), which is expected to be mainly due to the high cost of packaging materials and the fact that the newly acquired green vegetables have not been put into use in the first quarter. The sales expense rate / management expense rate / financial expense rate were 17.87% / 3.31% / – 3.72% respectively, with a year-on-year increase of -6.30 / + 0.88 / – 1.76pct respectively. The decline in sales expense rate is expected to be mainly due to the narrowing of advertising, the increase in management expense rate is mainly due to the increase in employee salary and the year-on-year increase in amortization of intangible assets, and the decline in financial expense rate is mainly due to the increase in interest income from cash management. The net interest rate is 31.11% (+ 2.44pct), which is expected to be mainly due to the decrease of sales expenses, financial expenses and R & D expenses.
Price increase + cost reduction + fee reduction, optimistic about the performance in 2022
1) revenue side: at the end of 2021, the company raised the price of its products by 3% – 19%. At present, it has been transmitted to the terminal, and the price increase bonus is prominent.
2) cost side: the average purchase price of 2022 young vegetable head is about 800 yuan / ton (a year-on-year decrease of about 30%). The newly acquired green vegetable head is expected to be launched successively around May, and the proportion of semi-finished product acquisition may decline this year, and the cost will decline significantly.
3) expense side: in 2022, the expense delivery will be more accurate, the advertising delivery will be reduced, and the overall sales expense rate is expected to decline.
4) channel side: the establishment of the second catering Department of the company has been basically completed, and a catering channel sales center has been established. The catering side is expected to contribute new increment.
5) capacity side: the new capacity project is progressing smoothly. At present, the company has a capacity of about 230000 tons and a pit capacity of about 300000 tons; We expect the long-term planned production capacity to be about 500000 tons and the pit capacity to reach 700000 tons, laying the foundation for the long-term development of the company.
Profit forecast
With the release of production capacity and the large volume of new categories such as radish, it is optimistic that the smooth implementation of the company’s price increase will lead to the increase of price, the increase of volume brought by the coordinated development of multiple categories dominated by mustard, and the profit elasticity brought by cost reduction and fee reduction. With the steady progress of channel sinking, the company’s performance will be gradually released. We expect EPS to be 1.17/1.42/1.70 yuan from 2022 to 2024, and the current share price corresponding to PE is 30, 25 and 21 times respectively, maintaining the “recommended” investment rating.
Risk tips
Macroeconomic downside risks, epidemic drag on consumption, regional expansion is less than expected, new product promotion is less than expected, price increase is less than expected, capacity digestion is less than expected, raw material prices rise, etc.
