\u3000\u3 Bohai Water Industry Co.Ltd(000605) 499 Eastroc Beverage (Group) Co.Ltd(605499) )
Event: on April 29, 2022, Eastroc Beverage (Group) Co.Ltd(605499) released the first quarterly report of 2022. 22q1 company achieved operating revenue of 2.01 billion yuan, yoy + 17.3%, and net profit attributable to parent company of 340 million yuan, yoy + 0.8%.
Core products continued to grow and markets outside the province continued to expand. 22q1 company continued to cultivate the Guangdong market and actively explore the national market. The sales volume of 500ml gold bottles continued to increase, driving the stable growth of the company’s sales revenue. 1) In terms of products, the core product Dongpeng special drink 22q1 achieved a revenue of 1.91 billion yuan (accounting for 95.4%), yoy + 15.9%; Other beverages 22q1 achieved revenue of 93 million yuan, yoy + 50.5%. 2) According to the sales mode, the revenue of 22q1 distribution / direct sales / online sales was 1.81/1.5/280 billion yuan respectively, yoy + 16.9% / + 11.4% / + 102.8% respectively. 3) In terms of regions, the revenue of 22q1 Guangdong / East China / Central China / Guangxi / Southwest / North China was + 7.1% / + 34.8% / + 35.2% / + 18.1% / + 18.1% / + 15.6% year-on-year respectively. The growth rate of Guangdong base camp slowed down and the development outside the Province was promoted rapidly.
The rising cost of raw materials has put pressure on the profit margin. The gross profit margin of 22q1 sales is 43.2%. If the impact of changes in accounting standards is not considered, yoy-3.1pcts is mainly due to the rise in the purchase price of raw materials white granulated sugar and pet, driving up the cost. On the expense side, the sales expense rate of 22q1 is 16.8%. If the impact of changes in accounting standards is not considered, yoy + 0.4pcts is mainly due to the company’s increased advertising and freezer placement. 22q1 management expense rate is 3.5%, yoy + 0.3pcts, mainly due to the increase of management personnel salary and information investment. Overall, the net profit margin of 22q1 sales is about 17.2%, yoy-2.8pcts.
We will deepen channel construction, distribute production capacity, and ensure the promotion of nationalization. In terms of channels, the company arranges sales tasks according to local conditions according to local conditions. For Guangdong region, implement the channel refinement strategy and sink the township market. For the national market, the company takes the lead in developing by the direct sales team, then establishes local dealers, adopts the large circulation mode to distribute goods, and finally turns to the intensive cultivation mode to gradually cultivate the blank market. By the end of the first quarter of 2022, the company had 2438 dealers, with a net increase of 126. In terms of production capacity, in order to meet the market demand in the process of national development and realize the long-term strategic objectives, the company has carried out production capacity layout in advance, established the eighth production base in Changsha, and is expected to be put into operation in March 2024, which can meet the delivery task in central China.
Profit forecast, valuation and rating: considering the upward price of pet brought by oil price this year, which brings great pressure on the cost side of the company, and there is great uncertainty in the price trend of pet in the future, we reduced the net profit attributable to the parent company in 202224 to RMB 1.373/17.67/2.187 billion (8.9% / 7.6% / 5.4% lower than the previous period), equivalent to EPS of 3.43/4.42/5.47 yuan in 20222024, and the corresponding PE of current stock price is 36x / 28x / 23x respectively. Energy drink is the boom track in the soft drink track. Dongpeng, as the second highest quality enterprise, has long-term growth potential. Maintain the “overweight” rating.
Risk warning: the risk that the nationalization process is not as expected; The risk of intensified industry competition.
