\u3000\u3 Shengda Resources Co.Ltd(000603) 517 Juewei Food Co.Ltd(603517) )
Event:
Juewei Food Co.Ltd(603517) released the annual report and the first quarterly report. The company’s operating revenue was 6.549 billion, the same as + 24.12%; The net profit attributable to the parent company was 981 million, the same as + 39.86%; Deduct non net profit of 719 million, the same as + 5.87%; EPS1. 60 yuan / share, with a cash dividend of 5.7 yuan (including tax) for every 10 shares. Among them, Q4’s operating income is 1.702 billion, the same as + 22%; The net profit attributable to the parent company is 17 million, the same as – 91%; Deduct non net profit of RMB 08 million, the same as – 95%. Q1 achieved an operating revenue of 1.688 billion, the same as + 12.09%; The net profit attributable to the parent company was 89 million, the same as – 62.24%; Deduct non net profit of 82 million, the same as – 64.73%.
Key investment points:
1. Due to multiple external factors, the performance is lower than expected, and the same store has not fully recovered. The impact of the epidemic in 2021 on the bittern industry is less than that in 2020, but the epidemic still repeats in the second half of the year, resulting in lower offline demand, especially the consumption power of high potential energy stores in transportation hubs, and the store operation has not fully recovered to the level of 2019. By opening stores against the trend from 2020 to 2021, the company seized market share, partially made up for the losses of the same store, superimposed the incremental contribution of consolidated subsidiaries, and still achieved 24% growth in the whole year, with the growth rate of Q4 revenue end of 22.39% month on month. Due to the increase in costs caused by the rise in the prices of raw materials and energy, and the company, as an industry leader, shares the industry risks with franchisees. Last year, Q4 and Q1 invested a lot of subsidy fees, and the profit side decreased significantly in the short term. Q4 only made a profit of 16.85 million yuan in a single quarter, driving down the annual profit growth rate.
2. We successfully completed the task of opening stores throughout the year, and there is still room for improvement in the performance contribution of new stores. In 2021, the company’s Halogen products business revenue was 5.743 billion yuan, the same as + 17.27%, including 5.607 billion yuan of fresh goods (+ 15.47%) / 136 million yuan of packaged products (+ 229.64%). The development of fresh goods was stable and the growth of packaged products was rapid. The total number of stores continued to increase by 1315 to 13714, a year-on-year increase of 10.6%. The average revenue of Juewei single store has only recovered to 91% in 2019, but the contribution of the company’s new stores to the revenue is still small. The number of stores younger than 5 years accounts for 61%, and the contribution to the revenue is only 54%. Moreover, the company’s single store revenue increases with the increase of store age (the single store revenue of stores older than 3 years is more than 20% higher than that of stores younger than 1 year, and 28.6% higher than that of stores older than 5 years). We believe that in the future, with the growth of new stores, the revenue contribution will continue to increase.
3. The investment income is thickened, and the profitability of the main business is under pressure. Due to the decrease in the supply of raw materials, the rise in prices and the rise in the cost of energy packaging materials, and the superposition of changes in revenue structure (the proportion of halogen products / franchisee management and other high gross profit businesses decreased by 4.88/0.27pct respectively in 2021; the gross profit of other businesses was low, with a year-on-year increase of -4.77pct, and the proportion of revenue increased in 2021), the company’s gross profit margin decreased year-on-year from the second half of last year, decreased by 1.32pct to 26.34% in Q4, and decreased by 1.80pct to 31.68% year-on-year. On the expense side, due to the subsidy of Q4 to franchisees, the annual sales rate was + 1.9pct to 8% year-on-year, and the single Q4 sales rate was 11.12%, the highest in previous years. In the same period of last year, due to the adjustment of accounting standards, the sales rate was negative. Excluding this impact, the gross sales difference of Q4 decreased by 14.86pct year-on-year. Therefore, the net interest rate of Q4 was only 1.08%, with a year-on-year decrease of 11.57pct. In 2021, due to the transfer of equity of Jiangsu Hefu and the investment Zhengzhou Qianweiyangchu Food Co.Ltd(001215) listing, the investment benefit accounted for 3.42% of the total income, with a year-on-year increase of + 5.33pct. Therefore, the annual net interest rate was 14.8%, with a year-on-year increase of + 1.6pct.
4. The same store recovered well at the beginning of the year. The epidemic affected the store operation in March, and the Q1 profit decreased significantly. From January to February, the company performed well in the same store and basically recovered to the level of 2019. In March, the epidemic situation was severe, many restaurants were closed and sales were seriously damaged. However, the company’s revenue still achieved double-digit growth, which was better than expected. The operation of profit side stores was weak, the cost increased faster than the revenue year-on-year, and the gross profit margin fell sharply by 4.18pct to 30.31% year-on-year, almost close to the gross profit level of 2020q1. At the same time, there are still some dealer subsidies in Q1, and the sales rate is + 7.32pct to 14.0% year-on-year, so the net interest rate is reduced by 10.43pct to 4.99%.
The company focuses on the core brine business, has prominent advantages in the supply chain, and is optimistic about the business recovery after the improvement of the epidemic situation. According to the data of the company’s annual report, the halogen products industry will still achieve a growth of 12% in 2021. According to the annual business strategy of “being honest and trustworthy and taking credit for a long time”, the company has far exceeded the growth rate of the industry by virtue of its strong supply chain, franchise system, brand precipitation and other advantages, so as to effectively improve the market share. (1) In terms of supply chain, the company has arranged the supply chain with a radius of Tus-Design Group Co.Ltd(300500) km, and established a supply chain network centered on 21 production bases (including 2 under construction) nationwide, so as to realize “cold chain distribution and sales on the same day” and effectively improve efficiency. (2) In terms of franchise system, a three-dimensional integrated chain franchise management mechanism with “product portfolio, single store model and franchise system” as the core elements has been constructed. The franchisee Committee has 116 theater committee working groups and more than 3000 franchisees, which has built a stable channel foundation for the healthy growth of juewe ecology. (3) Food ecosystem creates the second and third growth curve. Closely focusing on the company’s core competence in cold chain distribution network, chain channel management and control, organizational ability improvement, industrial investment integration and other aspects, the company focuses on the halogen core track, and the food ecology cooperates closely with the main business of duck neck to build an industry supporting the company’s “endogenous + extension” × The growth of “capital” is a dual engine. Under the guidance of the strategy of “deep coverage and intensive cultivation of channels”, the company opened stores against the trend in 2020 and maintained a steady pace of opening stores in 2021, cooperated with the whole process of MES system, opened links such as procurement, production, warehousing and logistics, and used digital and intelligent tools to improve profitability. As the leader of halogen products, the company has obvious competitive advantages and good certainty of long-term growth. The construction of catering supply chain system and the company’s main business are expected to achieve mutual benefit and win-win results.
The profit forecast and investment rating company suffered short-term losses due to the epidemic, but the same store operation has recovered well at the beginning of this year, and the expansion plan was completed against the trend last year. The company has significant advantages in supply chain and channel construction, and the food ecosystem business also began to contribute profits. We expect that after the impact of the epidemic subsides, the company’s operation is expected to achieve a better recovery. It is estimated that the company’s EPS from 2022 to 2024 will be 1.37 yuan, 1.97 yuan and 2.36 yuan respectively, and the corresponding PE will be 31, 21 and 18. This round of epidemic has a great impact, and the company will be rated as “overweight” for the first time.
Risk Tips 1) the duration of the epidemic is longer than expected; 2) The economic downturn caused the company’s performance recovery to be less than expected; 3) The fluctuation of raw material supply price affects the company’s gross profit margin and profitability; 4) Franchise mode operation and management risks; 5) Food safety issues.
