\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 305 Jiangsu Hengshun Vinegar-Industry Co.Ltd(600305) )
Key investment points
Event: the company released the annual report of 2021 and the first quarterly report of 2022, and achieved a revenue of 1.89 billion yuan in 21 years, a year-on-year decrease of 6%; The net profit attributable to the parent company was 120 million yuan, a year-on-year decrease of 62.2%; Among them, 21q4 achieved a revenue of 530 million yuan, a year-on-year decrease of 6%, and realized a net profit attributable to the parent company of – 1.57 billion yuan, compared with 84 million yuan in the same period of 20 years; Meanwhile, the company plans to distribute cash dividends of 1.01 yuan (including tax) to all shareholders for every 10 shares. 22q1 company achieved a revenue of 570 million yuan, a year-on-year increase of 10.6%, and a net profit attributable to the parent company of 80 million yuan, a year-on-year decrease of 2.1%.
The main business income is under pressure, and the national expansion has been significantly accelerated. In terms of business, the company’s Vinegar revenue in 21 years was 1.21 billion yuan, a year-on-year decrease of 9.8%; The revenue of cooking wine reached 320 million yuan, a year-on-year increase of 1.8%. The income of the main condiment industry is under pressure, which is mainly subject to: 1) the repeated epidemic situation in the country has seriously damaged the company’s strong regions in East China and central China; 2) Emerging channels such as community group buying bring low-cost competition and impact on traditional supermarket channels; 3) The expansion of other leading condiments accelerated and occupied the market space of the company. In the past 21 years, other businesses performed well and achieved revenue of 320 million yuan, a year-on-year increase of + 11.6%, which may be related to the rapid and large-scale production of the company’s new compound braised meat seasoning. The performance of the company was significantly improved by + 226% / + 17.5% year-on-year. In terms of channels, the company’s online channels performed well in the past 21 years, realizing an income of 185 million yuan, a year-on-year increase of + 34.6%; 22q1 online sales maintained a high growth rate, with a year-on-year increase of + 26.7%. In terms of sub regions, in the past 21 years, except for the central China region with a year-on-year revenue of + 1.9%, other regions have declined to varying degrees. The revenue of East China, the headquarters of 22q1 company, has a year-on-year revenue of + 10.1%. In addition, benefiting from the acceleration of channel development, the revenue of South China / West China has a year-on-year revenue of + 18.3% / + 33%. The company continued to make efforts to expand nationwide. In the whole year of 21, the number of dealers increased by 381 to 1820, which was the highest level in recent years. At the end of 21, the company’s prefecture level / county-level market coverage was 89.7% / 50.1% respectively.
The cost of raw materials continues to rise, and the profitability is under pressure in the short term. In the 21st year, the gross profit margin of the company was 37.6%, with a year-on-year decrease of 3.2pp. The gross profit margin of 21q4 / 22q1 was 33.4% / 37.9% respectively, with a year-on-year decrease of 6.4pp/1.5pp respectively. 1) the price of raw materials is mainly subject to the rise of raw material price; 2) In order to promote national expansion, low gross profit products quickly dilute the gross profit level in large quantities. In terms of expenses, the sales expense ratio increased by 4.9pp to 18.2% year-on-year in 21 years due to the company’s increase in publicity and channel construction expenses; 22q1 sales expense ratio was 12.1%, down 0.4pp year-on-year; 22q1 management expense ratio remained stable, with a year-on-year decrease of 0.2pp to 5.3%. The pressure on the cost side continued, resulting in a year-on-year decrease of 9.6pp to 6.2% in the net interest rate in 21 years; By controlling the sales expenses, the net interest rate of 22q1 improved significantly month on month, with a slight year-on-year decrease of 2.4pp to 13%.
Focus on the main business, demonstrate determination, and add impetus to the implementation of reform. 1) The company announced in March 22 that it planned to divest Hengshun mall, its largest non main business asset, highlighting the company’s determination to further focus on the main business of condiments; The company will adhere to the three core development strategies of “deep vinegar industry, high wine industry and wide sauce industry”. 2) The internal management reform continued, and the former world war VIII was upgraded to World War IX after the total blood exchange in the theater, further improving the combat effectiveness of the team. 3) On the product side, vinegar / cooking wine / polyphonic continue to launch new products, improve the product matrix, and increase the penetration of catering channels and the pace of investment promotion on the channel side. With the implementation of equity incentives and other measures, the reform of management, marketing and product side continued to deepen, and the company’s leading position in the vinegar industry was consolidated, with broad space for long-term growth.
Profit forecast and investment suggestions. It is estimated that the EPS from 2022 to 2024 will be 0.18 yuan, 0.22 yuan and 0.27 yuan respectively, and the corresponding dynamic PE will be 60 times, 48 times and 39 times respectively, maintaining the “hold” rating.
Risk tips: the risk of price fluctuation of raw materials, the risk of repeated covid-19 epidemic, and the risk of deterioration of market competition pattern.
