\u3000\u30 Shaanxi Zhongtian Rocket Technology Co.Ltd(003009) 99 Yihai Kerry Arawana Holdings Co.Ltd(300999) )
Events
On the evening of April 29, 2022, the company released the first quarterly report of 2022: the revenue of 2022q1 was 56.536 billion yuan (+ 10.68%); The net profit attributable to the parent company was 114 million yuan (- 92.71%); Deduct non net profit of RMB 827 million (- 56.90%).
Key investment points
Affected by the epidemic, the profit in the first quarter was under pressure
There is a large difference between net profit attributable to parent company and net profit deducted from non attributable to parent company, which is mainly caused by hedging business. 2021q1 gross profit margin 7.15% (- 6.12pct), net profit margin 0.39% (- 3.18pct). The main reasons for the decline in gross profit margin are as follows: 1) the prices of the company’s main raw materials, such as soybean, soybean oil and palm oil, rose sharply, resulting in a sharp rise in product costs. Although the company raised the prices of some products, it did not fully cover the rise in raw material costs. 2) Due to the impact of the multi-point spread of the epidemic in China on logistics and transportation, terminal sales, catering, etc., combined with the weak economy, sluggish consumption and intensified market competition, the sales volume of kitchen food of the company decreased year-on-year in the first quarter of 2022, and the profits of medium and high-end retail products were greatly affected. 3) In the first quarter, the actual income tax rate was higher, mainly due to the tax rate differences of different subsidiaries. Some high tax rate companies made good profits and some low tax rate companies made losses.
2022q1 sales expense rate / management expense rate / financial expense rate are 2.97% / 1.45% / 0.31% respectively, the same as -1.75 / – 0.27 / + 0.34pct respectively. The decline in sales expense rate is expected to be mainly due to the decrease in advertising expenses.
Equity incentive has boosted enthusiasm, and the advantages of diversified layout and large-scale have emerged
In March 2022, the company issued an equity incentive plan to grant 29.8 million restricted shares to 1635 directors, supervisors and core backbones at a price of no less than 30.76 yuan per share, involving a wide range of objects, which can effectively stimulate the enthusiasm of employees.
With the continuation of the recovery trend of consumption, the company’s traditional businesses such as kitchen food, feed raw materials and oil technology will achieve restorative development. In terms of new business, accelerate the construction of central kitchen and condiment projects. 1) Central kitchen: in the future, the company will arrange 100 central kitchens across the country to form a scale advantage. At present, the construction of central kitchen projects in Chongqing, Langfang and Xi’an is accelerated and will be put into operation in 2022. 2) Condiments: soy sauce uses dual brands and dual strategies. The completion of Taizhou Wanzhuang soy sauce phase II project will double the production capacity. Yangjiang, Guangdong is preparing to build a factory. The condiment business pays more attention to the rapid growth of weight, and realizes capacity expansion through self construction and acquisition.
The central kitchen and condiments are closely related to the kitchen food business such as traditional grain, oil, rice and noodles. It is expected to better integrate the company’s existing products and channel resources and boost the gross profit margin.
Profit forecast
We are optimistic that the company will continue to deepen its original business, and the central kitchen and condiment project will become the new point of the company’s performance. At the same time, the implementation of equity incentive will effectively improve the company’s business vitality. It is estimated that the EPS from 2022 to 2024 will be 1.15/1.44/1.71 yuan, and the current share price corresponding to PE will be 42, 33 and 28 times respectively, maintaining the “recommended” investment rating.
Risk tips
Macroeconomic fluctuation risk, industrial policy change risk, epidemic drag consumption risk, downstream demand fluctuation risk, raw material price fluctuation risk, food safety and quality control risk, etc.
