\u3000\u3 China Vanke Co.Ltd(000002) 695 Jiangxi Huangshanghuang Group Food Co.Ltd(002695) )
The epidemic situation is disturbed, the operation is under pressure, the long-term trend is good, and the “overweight” rating is maintained
The company released 2021 annual report and 2022q1 quarterly report. In 2021, the revenue was 2.34 billion yuan, a year-on-year decrease of 4.0%, and the net profit attributable to the parent was 150 million yuan, a year-on-year decrease of 48.8%. In 2021q1, the company’s revenue was 540 million yuan, a year-on-year decrease of 10.6%, and the net profit attributable to the parent company was 40 million yuan, a year-on-year decrease of 45.6%. The epidemic situation is repeated and the operation is under pressure. We lowered the 20222023 and added the profit forecast for 2024. It is expected to achieve a net profit of 183 (- 1.4), 215 (- 2.0) and 248 million yuan, with a year-on-year increase of 26.4%, 17.7% and 15.1%. The current share price corresponds to 30.0, 25.5 and 22.1 times of PE. As a leading enterprise in the industry, the company is expected to benefit from the improvement of industry concentration after the epidemic and maintain the “overweight” rating.
Repeated outbreaks affect store expansion and same store revenue
The company’s revenue in 2021q4 and 2022q1 decreased by 19.2% and 10.6% year-on-year, mainly because the epidemic repeatedly dragged down store sales. At the end of 2021, the number of stores totaled 4281, with a net decrease of 346, mainly due to the company’s store expansion in recent years and the obvious decline in the flow of people. In the same store, the impact of the epidemic on supermarkets, transportation hub stores and other channels is still pending recovery after the epidemic. Regionally, Jiangxi’s revenue fell by 6.7%, mainly due to the reduction of catering party scenes in the province. Rice products business fell 4.5%, mainly affected by the decline in the price of raw pork and the price reduction of zongzi products. 2022q1 company’s stores continue to expand, and the number of stores is expected to be 100200.
The cost increases and the profit performance is under pressure
The company’s gross profit rate decreased by 2027pct and 2027pct, mainly due to the decline of raw material costs. In 2021q4, in addition to the decline in gross profit, the sales expense rate increased by 7.7pct year-on-year, which was also affected, mainly due to the investment in store leasing, promotion and other expenses of the company. In 2022q1, the net interest rate decreased by 4.3pct, and the loss was reversed month on month. The main reason was that the company actively adjusted its business strategy, reduced expenses and reduced the sales expense rate by 2.9pct.
The long-term goal remains unchanged, waiting for the bottom to reverse
The company has clear long-term strategic objectives, implements the “531” medium and long-term plan, and advances towards the goal of “thousands of cities and thousands of stores” in the long term. The company actively adjusted the channel structure of stores, strengthened street community stores, developed factories and Campus Channel stores, planned to open 1059 stores in 2022, strategically promoted the expansion of the Yangtze River Delta and regions, steadily promoted the bases in Shaanxi and Chongqing, and introduced digital management system. The company’s short-term performance is under pressure and is expected to reverse at the bottom in the future.
Risk tips: repeated impact of the epidemic, risk of rising prices of raw materials and food safety risk.
