\u3000\u3 Shengda Resources Co.Ltd(000603) 288 Foshan Haitian Flavouring And Food Company Ltd(603288) )
Key investment points
Event: the company achieved revenue of 7.210 billion yuan in 2022q1, with a year-on-year increase of 0.72%; The net profit attributable to the parent company increased by -2.96 billion yuan year-on-year; The net profit attributable to the parent company after non deduction was 1.791 billion yuan, a year-on-year increase of – 5.49%.
Under the repeated epidemic, the seasoning revenue fell in the first quarter. 2022q1 company achieved condiment revenue of 6.783 billion yuan, a year-on-year increase of – 0.98%. Considering the contribution of price increase in October last year, the main reason is that the sales volume decreased significantly. From January to February, the sales end of the company performed relatively well, but the strong epidemic in March repeatedly led to great pressure on the sales end, many places were blocked by logistics, delivery was difficult, and the demand for catering channels was weak. By category, in 2022q1, soy sauce, seasoning sauce, oyster sauce and other condiments achieved revenue of RMB 4076, 807, 1131 and 768 million respectively, with a year-on-year increase of – 0.53%, – 8.61%, – 3.17% and 9.70% respectively. Seasoning sauce declined significantly. On the one hand, the first quarter was the peak season for seasoning sauce sales, which was more obviously affected by the epidemic; On the other hand, cities with large sales of seasoning sauce are disturbed by the epidemic. Other condiments increased against the trend, mainly due to the continuous development of vinegar, cooking wine and other categories, and the base number was low. In terms of channels, offline and online channels in 2022q1 achieved revenue of RMB 6.490 billion and 293 million respectively, with a year-on-year increase of – 3.90% and 202.23% respectively. In terms of regions, the eastern, southern, central, northern and western regions of 2022q1 achieved revenue of 1.377 billion yuan, 1.213 billion yuan, 1.486 billion yuan and 825 million yuan respectively, with a year-on-year increase of 5.61%, 6.02%, – 9.27%, 0.37% and – 7.25% respectively. The decline in the central and western regions is mainly due to the high base of 2021q1. 2022q1 saw a net decrease of 291 to 7139 dealers, and continued to optimize and adjust dealers.
The pressure on the cost side continued, and cost reduction and cost control were actively responded to. In 2022q1, the gross profit margin of the company decreased by 2.77 PCT to 38.17% year-on-year, mainly due to the continuous rise in the prices of packaging materials and raw materials, and the gross profit margin continued the trend of pressure. In 2022q1, the rates of sales, management, R & D and financial expenses of the company increased from -0.27, + 0.20, -0.36 and + 0.13 PCT to 5.43%, 1.35%, 2.56% and – 1.45% respectively year-on-year. The overall cost rate showed a downward trend during the period, partially alleviating the pressure on gross profit margin. Overall, in 2022q1, the net profit margin attributable to the parent company decreased by 1.92 PCT to 25.37% year-on-year.
The company’s confidence and profit growth of 12% in 2022 are demonstrated. The strong recurrence of the short-term epidemic has led to a great impact on the demand side, and the logistics has also been affected. In the follow-up, with the gradual stabilization of the epidemic, the sales side will gradually pick up. The cost side is expected to bear great pressure throughout the year. The company will strive to achieve the stability of the annual net interest rate through active cost reduction, efficiency increase and cost control. We estimate that the company’s revenue from 2022 to 2024 will be 28.038 billion yuan, 32.336 billion yuan and 36.880 billion yuan respectively, the net profit attributable to the parent company will be 7.482 billion yuan, 9.147 billion yuan and 10.937 billion yuan respectively, and the EPS will be 1.78, 2.17 and 2.60 yuan respectively, corresponding to 51, 42 and 35 times of PE, maintaining the “buy” rating.
Risk warning events: epidemic spread risk, food safety risk, price increase transmission is less than expected, and the price of raw materials continues to rise
