\u3000\u3 Shengda Resources Co.Ltd(000603) 288 Foshan Haitian Flavouring And Food Company Ltd(603288) )
Event:
Foshan Haitian Flavouring And Food Company Ltd(603288) released the first quarterly report of 22 years, and the Q1 revenue in 2022 was 7.21 billion yuan (+ 0.72%); The net profit attributable to the parent company is RMB 1.829 billion (- 6.36%), deducting non net profit of RMB 1.791 billion (- 5.49%). Revenue and profit growth was slightly lower than expected.
Comments:
Income analysis: the epidemic affects the overall performance, and the base affects the regional performance. The company achieved a revenue of 7.210 billion yuan in Q1, a year-on-year increase of + 0.72%. 1) Sub products: soy sauce 4.076 billion yuan (- 0.53%); Sauce 807 million yuan (- 8.61%); Oyster sauce 1.131 billion yuan (- 3.17%); Other RMB 767 million (+ 9.70%); 2) Sub regions: 1.377 billion yuan (+ 5.61%) in the eastern region; The southern region is 602 million yuan (- 3.09%); 1.482 billion yuan (- 9.27%) in the central region; 1.886 billion yuan (+ 0.37%) in the northern region; The western region is 825 million yuan (- 7.25%), and the decline in the growth rate in the central and western regions is mainly related to the base. 3) Sub channels: offline channels: 6.49 billion yuan (- 3.90%); Online channel 293 million yuan (202.23%). 4) Dealers: 7139 dealers in 22q1, with a net decrease of 291.
Profit analysis: the cost increases, the gross profit is under pressure, and the blade improves efficiency. The net profit attributable to the parent company was 1.829 billion yuan, a year-on-year increase of – 6.36%. Q1 gross profit margin was 38.17%, year-on-year -2.77pct, mainly due to the rise of raw material costs, and the net profit margin was 25.39%, year-on-year -1.93pct, mainly due to the decline of gross profit margin. During the period, the expense rate was 7.89% (- 0.30pct), of which the sales expense rate was 5.43% (- 0.27pct), the management expense rate was 1.35% (+ 0.20pct), the R & D expense rate was 2.56% (- 0.36pct), and the financial expense rate was – 1.45% (+ 0.13pct). In the past 22 years, the company continued to look inward and turn its edge to itself under the background of significant upward cost pressure. During the period, the expense rate decreased and the efficiency improved.
22 year Outlook: the transmission of price increase needs to be confirmed, and the pressure on the annual profit target is slightly greater. We repeated the previous price increases in the condiment industry and believed that this price increase is similar to the price increase in 10-12 years. The resurgence of imported inflation does not rule out the possibility of a second price increase. At present, CPI is gradually rising. Although it is uncertain whether PPI will move smoothly to CPI, from the perspective of imported inflation, the main grain producing countries are in the stage of replenishing inventory after the epidemic. With the occurrence of natural disasters in some areas, the prices of grain crops such as soybeans are expected to rise sharply and the pressure on enterprises is increased. Driven by multiple reasons, the cost and price of raw materials are expected to rise gradually, and the possibility of secondary price increase cannot be ruled out. In addition, we believe that it needs to be verified at both ends half a year after the price increase, and the verification is still in progress. Half a year after the price increase, it needs to go through four rounds of verification at both ends. One is the verification at the home end, the other is the verification at the catering end, which needs to be verified in the light and peak seasons respectively. The first stage of price increase (KA peak season) has passed the assessment, and the second stage (catering off-season / peak season) still needs to be confirmed.
At the beginning of the year, the company set a growth target of 12% for both revenue and profit in 2022. Considering the growth rate of 22q1, the growth rates of revenue and net profit in the next three quarters were 16.5% and 19.6% respectively. Considering the base and the rising cost of soybeans, we believe that it is more likely to achieve the revenue target and the pressure to achieve the profit target is slightly greater. On the one hand, although the company can lock the cost price of raw materials such as soybeans in advance, there is still uncertainty in the price of soybeans. Secondly, the overall operation efficiency of the company is higher than that of other enterprises in the industry. Whether it is the internal operation efficiency of the company, external publicity and channel market investment, this will effectively stimulate the actual sales and reduce the internal loss.
Long term outlook: continue to do a good job in condiments in the third five year plan, and constantly deepen the categories and channels. 20192023 is the five years of the company’s third five year plan. The company will continue to make efforts in categories and channels, insist on making condiments and strive for double-digit growth.
1) categories: further build the market leading advantages of the three core categories of soy sauce, oyster sauce and soybean sauce. The proportion of high-end products of soy sauce is expected to increase from 40% to 50%. Expand the volume of oyster sauce, strengthen the cultivation of new markets of soybean sauce, and pay attention to the R & D and cultivation of new categories such as vinegar and cooking wine
2) channels: build a thick channel network, strengthen the development of blank and weak markets in the third and fourth tier cities, and promote the steady growth of income. According to the business growth target of the company in the “third five year plan”, the revenue and profit from 2019 to 2023 will maintain a compound growth of more than double digits.
Considering the structural upgrading, product volume and price space and the deepening progress of the company’s channels, we judge that the probability of reaching the third five year plan is high and continue to be optimistic for a long time.
Profit forecast and rating: maintain the “overweight” rating Foshan Haitian Flavouring And Food Company Ltd(603288) relying on the outstanding advantages of brand, channel, category and scale, the moat continues to be widened. Benefiting from the dividends of concentration improvement, consumption upgrading, scale and management, the company will continue to maintain sustained and steady growth in the future. In the long run, the “third five year plan” is expected to be realized smoothly. The company’s price increase is expected to reshape channel profits, but due to the repeated impact of the epidemic, the impact of price increase on sales will last longer than in the past. We expect the revenue growth rate from 2022 to 2024 to be 12%, 15% and 16% respectively; The growth rate of net profit was 12%, 18% and 19% respectively; The corresponding EPS is 1.78, 2.10 and 2.49. Considering the continuous and stable growth of performance and the valuation premium of the leader, we give 60 times PE according to the EPS in 2022, and the stage target price is 107 yuan, maintaining the “overweight” rating.
Risk warning: industry competition intensifies; Price fluctuation of raw materials; Food safety issues;
