\u3000\u3 China Vanke Co.Ltd(000002) 507 Chongqing Fuling Zhacai Group Co.Ltd(002507) )
[one sentence logic]
Chongqing Fuling Zhacai Group Co.Ltd(002507) is the leader in the packaging mustard industry with a market share of 40%, and the cost of green vegetables with raw materials accounting for more than 45% has decreased by 38% + the average price of main products has been increased by 14%, and the favorable price + cost contraction has been completed, and the delivery is more refined. With the superposition of epidemic situation and home consumption scenario, the dynamic sales are good, and the performance in 22 years is expected to exceed the expectation.
[exceed expectations and drivers]
Market concerns: ① the company has raised prices 13 times in recent 14 years. Frequent price increases will drag down dynamic sales, and this round of price increases may lead to a decline in sales; ② With the inflection point of the epidemic in May and the decline of costs, the company began to cash in to the statement end, and the 22-year performance elasticity of the company is reflected in Q2;
We believe that: ① 21q4 company directly increases the price and can enjoy the price increase dividend for the whole year of 22 years; At the same time, after the price increase, the profit margin of the channel has thickened (increased by 5pct + year-on-year). The company has benefited from this round of epidemic, and the consumption scenes of families under home isolation have increased. The channel is expected to actively increase inventory, and the volume in 22 years has increased or exceeded expectations; Moreover, the company has the advantage of national distribution network, can realize rapid replenishment, and the market share is expected to be further improved; ② 22q3 will enjoy the cost downward dividend + sales expenses (brand promotion expenses) return to the normal level in the whole quarter, and 22q3 performance will accelerate significantly, driving the annual performance to exceed expectations;
[distinctive cognition]
Market concerns: the company is limited by the small scale of the packaging mustard industry as a whole, and the channels have basically achieved coverage, so the company’s future growth space is limited.
We believe that: packaged pickled mustard is expected to penetrate into the field of takeout business at end B, broaden the application scope of pickled mustard with meals (incremental space), and further replace bulk pickled mustard at end C, so as to improve the packaging rate (stock space); The company benefited from the stable pattern of single oligarchs in the industry (the market share was 41%, surpassing the second place by nearly 30pct), and the performance exceeded expectations, mainly due to the deep sinking of C-end channel, the expansion of b-end channel and the release of production capacity of new categories (mainly radish).
[inspection index and catalyst]
Inspection indicators: ① the company’s inventory level gradually decreased to the normal level, and the demand for replenishment of inventory increased in May; ② The number of dealers or terminal outlets in the sinking market accelerated, and the amount of goods transferred by dealers in the county-level market increased.
Catalyst: ① under the continuous deduction of the epidemic situation, the dynamic sales of pickled mustard exceeded expectations, and the sales of new retail and other platforms exceeded expectations; ② The development of dealers in sinking market exceeded expectations, and the dynamic sales of salt reduced mustard exceeded expectations.
[profit forecast]
It is estimated that the revenue growth rate from 2022 to 2024 will be 16.7% / 10.5% / 10.3% respectively; The growth rate of net profit attributable to parent company was 38.4% / 11.7% / 14.2% respectively; EPS1. RMB 16.29/share; The current price corresponds to 31.66/28.33/24.80 times PE from 2022 to 2024. Give the target valuation of 40xpe in 2022, corresponding to the target price of 46.26 yuan and the current price space of 31%, and give a “buy” rating.
[risk tips]
Channel sinking progress is lower than expected, new product expansion, intensified market competition, raw material cost fluctuation and food safety risk.
