\u3000\u3 Shengda Resources Co.Ltd(000603) 043 Guangzhou Restaurant Group Company Limited(603043) )
Key elements of the report:
On April 27, 2022, the company released the 2022 Q1 performance report. The announcement showed that 22q1 achieved a revenue of 747 million yuan (YoY + 11.51%), a net profit attributable to the parent company of 53 million yuan (YoY + 10.36%), and a net profit not attributable to the parent company of 51 million yuan (YoY + 13.23%), and the company’s performance basically met the expectations.
Key investment points:
The demand for quick-frozen food increased and the catering business recovered well: benefiting from the high demand for quick-frozen food caused by the outbreak of epidemic in many places in Guangdong and the extension of home time since this year, the company’s Q1 quick-frozen food achieved a revenue of 274 million yuan, a year-on-year increase of 27.66%. The catering business recovered well, and the revenue increased by 26.14% year-on-year to 218 million yuan. The company’s revenue in the first quarter of this year increased by more than 40% compared with the same period of 19 years, and the net profit attributable to the parent increased by 15.39% compared with the same period of 19 years. The performance has comprehensively exceeded the pre epidemic level.
The quick-frozen business pushed up the overall gross profit margin, and the net profit margin remained stable: the company achieved a gross profit margin of 30.31% (YoY + 1.32pcts) in 22q1. The adjustment of the structure of quick-frozen food products and the decline of pork prices pushed up the gross profit margin of the quick-frozen business, driving the overall gross profit margin. 22q1 sales / management / R & D / financial expense rates were 9.49% / 9.22% / 2.19% / – 0.38% respectively, with a year-on-year increase of + 0.70 / – 0.16 / + 0.06 / – 0.01pcts respectively. Overall, the company’s 22q1 net interest rate was 7.12% (YoY + 0.02pcts), which was the same as that of last year.
Actively layout the market outside the province and steadily expand the quick-frozen production capacity: the company has planned to explore the market outside the province. Last year, the proportion of the East China market increased significantly. This year, it will focus on expanding the East China market from three aspects: the improvement of market production capacity, the layout of catering stores and the strengthening of sales team. In addition, the company’s original quick freezing capacity was basically saturated last year, and this year will focus on releasing the capacity of Meizhou base on the basis of product quality assurance; The phase II quick freezing project of Xiangtan base is progressing steadily and is expected to contribute significant revenue increment in the future.
The exercise of the second phase of the first round of equity incentive has been completed, and the company has sufficient confidence in long-term development: on November 19, 2018, the first phase of the company’s equity incentive plan was implemented, granting 4.0195 million stock options to 255 incentive objects, and the exercise price is 17.86 yuan / share. On February 24 this year, the company announced that the independent exercise of the second exercise period of the first phase of the stock option incentive plan was completed, and the total share capital of the company changed from 565594658 shares to 567224041 shares. The backbone of the company actively exercised the rights, with great potential for future stock price growth and sufficient confidence in long-term development. The company will continue to explore diversified equity incentive forms allowed by the policy, give full play to the incentive effect and promote the development of the company. However, the quarterly report disclosed that on the same day, the company announced that the chairman of the company plans to reduce the shares held by no more than 209000 shares, and the planned reduction ratio is no more than 0.0369%, or it will cause certain stock price fluctuations in the short term.
Profit forecast and investment suggestions: it is estimated that the net profit attributable to the parent company from 2022 to 2024 will be RMB 653 / 755 / 856 million, with a year-on-year increase of 17% / 16% / 13%, corresponding to EPS of RMB 1.15/1.33/1.51/share, and the corresponding PE price on April 28 will be 19 / 17 / 15 times. In the long run, the company adheres to the coordinated development of the dual main industries of “food + catering”, the business in the province has increased steadily, and the growth of the East China market outside the province can be expected, but the reduction of the company’s directors may have a negative impact on the stock price in the short term. Considering the growth momentum brought by catering and quick freezing business to the company, compared with comparable food companies, the valuation cost performance is higher, and the “buy” rating of the company is maintained.
Risk factors: macroeconomic downside risk, food safety risk, raw material rise risk, production capacity release and sales growth mismatch risk.
