\u3000\u3 Ping An Bank Co.Ltd(000001) 215 Zhengzhou Qianweiyangchu Food Co.Ltd(001215) )
Event:
Zhengzhou Qianweiyangchu Food Co.Ltd(001215) released the annual report of 2021 and the first quarterly report of 2022: the company achieved a revenue of 1.274 billion yuan in 2021, a year-on-year increase of + 34.89%, a net profit attributable to the parent company of 88 million yuan, a year-on-year increase of + 15.51%, a deduction of non net profit of 86 million yuan, a year-on-year increase of + 47.14%, and plans to pay out 1.50 yuan (including tax) for every 10 shares. In 2022, Q1 achieved a revenue of 348 million yuan, a year-on-year increase of + 20.17%, a net profit attributable to the parent company of 29 million yuan, a year-on-year increase of + 44.78%, and a deduction of non net profit of 24 million yuan, a year-on-year increase of + 24.16%.
Key investment points:
Under the influence of the epidemic situation, Q1 still achieved rapid growth in performance and strong operational stability. In Q4 last year, the company achieved a revenue of 386 million yuan in a single quarter, a year-on-year increase of + 14.90%, and a net profit attributable to the parent company of 32 million yuan, a year-on-year increase of + 14.63%. Considering that Q4 had a high base due to the increase of channel preventive stock demand in the previous year, the growth rate of Q4 revenue slowed down month on month last year, but still achieved a relatively stable growth. On the profit side, due to more government subsidies in 2020, which affected the actual profit performance, the growth rate of Q4 deduction of non net profit of the company reached 47.14%, and the operating performance was brilliant. In Q1 this year, when the epidemic had a great impact on the downstream catering, the performance still maintained rapid growth. On the one hand, it was driven by the company’s new products for Wallace, Haidilao and other fast-growing large customers. On the other hand, due to the continued large volume of small b-end large products and the high enthusiasm of replenishing inventory in some regions under the catalysis of the epidemic in March. At the same time, due to the price locking time point of large class B customers, Q1 is basically not affected by the rise of raw material costs, and the profit performance is better than the income. If the impact of equity incentive expenses is excluded, the net profit deducted from non profit increases by about 43.5% year-on-year to 28 million yuan.
Large quantities of fried dough sticks and steamed and fried dumplings drive the overall growth, and the development of key customers outside Yum is progressing smoothly. In terms of categories, the revenue of fried products was 660 million yuan, with a year-on-year increase of 26.66%, mainly due to the continuous volume of large single products of fried dough sticks, the revenue of fried dough sticks increased by 34.65% year-on-year, and the revenue increased by 43.88% after excluding the increment brought by big customer yum. Driven by the best-selling of cartoon bags and other new products, the annual revenue of cooking products increased by 39.20% to 256 million yuan. At the same time, in 2021, the company increased the R & D and promotion of steamed and fried dumplings, achieved large-scale growth in group meals and small class B customers, and successfully built it into a new single product of RMB 100 million. The annual revenue of steamed and fried dumplings increased by 167.87% to RMB 135 million year-on-year, driving the overall growth of dish products (a year-on-year increase of 162.11%). In terms of channels, in 2021, relying on the self expansion of Wallace and Haidilao and the continuous introduction of new products, the company obtained a large increase in direct sales revenue. At the same time, it added major customers such as Laoxiang chicken and Ruixing. The overall direct sales revenue was 511 million yuan, a year-on-year increase of 51.62%. Driven by the large volume of large single products such as fried dough sticks and steamed and fried dumplings, the distribution channel increased by 25.35% year-on-year to 759 million yuan. Due to the transfer of a small number of chain customers from distribution to direct sales in 2021, the actual distribution revenue was faster than that at the statement end.
The adjustment of product structure has significantly contributed to the improvement of gross profit margin, and the gross profit margin and net profit margin in Q1 remain stable. In 2021, the gross profit margin of the company increased by 0.65 PCT to 22.36% year-on-year, mainly due to the change of product structure. The development of new customers such as tea and coffee promoted the increase of the proportion of customized baking products. The gross profit margin of baking increased by 8.78 PCT to 24.95%, and the gross profit margin of dishes increased by 11.61 PCT to 21.59%, mainly due to the scale effect after the volume of steamed and fried dumplings. The annual net interest rate decreased by 1.17pct to 6.94%. If the influence of government subsidies is excluded, the net interest rate deducted will increase by 0.56pct to 6.72%. In 2022, Q1 was promoted by the same factors. The gross profit margin increased by 0.3pct to 22.5% year-on-year, and the management expense ratio increased by 0.53pct to 9.53% year-on-year due to the amortization of equity incentive expenses. However, Q1 received government subsidies this year, and the net profit margin increased by 1.42pct to 8.25% year-on-year. If the influence of government subsidies is excluded, the non net profit margin increased by 0.22pct to 6.84% year-on-year.
The annual revenue is expected to continue to maintain rapid growth and continue to enjoy the dividend of improving the penetration of semi-finished catering products. Looking forward to the whole year, the recent outbreak of the epidemic has occurred in many places, some areas have been closed for prevention and control, the supply of staple food products of rice noodles is in short supply, and the preventive stock of small B dealers has increased. After the improvement of logistics obstruction, it is expected to usher in a large demand for replenishment of inventory in the short term, and continue to grow driven by the large volume of large single products such as fried dough sticks and steamed and fried dumplings. Among the company’s major customers this year, yum’s revenue is expected to be consistent with its single digit expansion rate. In recent years, new customers such as Wallace, Haidilao, Laoxiang chicken and Ruixing, on the one hand, through their own expansion, on the other hand, with the continuous deepening of bilateral cooperation and the acceleration of new product introduction, the revenue of big b-end is expected to continue to grow rapidly. In addition, the company has set up a new “yuzhicai” subsidiary, which will take advantage of the development of the industry and combine its own catering channel advantages to force the prefabricated vegetable sector. In terms of profit, the company’s main raw materials are flour and soybean oil. At present, the cost is still at a high level. The company usually locks the price from April to May. It is expected that the cost will have a certain pressure, and the expense side will continue to benefit from the increase of scale effect. However, due to the impact of equity incentive expenses this year, the profit is expected to be slightly slower than the income growth. In the medium and long term, the improvement of catering chain rate is the inevitable trend of future development. The demand for cost reduction and efficiency increase of the catering industry will increase, and the demand for quick-frozen semi-finished products will also increase. With the gradual decline of the impact of the epidemic, the catering industry will return to the steady growth trend. The company continues to tap potential through its own expansion of existing large B customers + chain catering “rookies”, and the expansion of small and medium-sized catering customers is expected to continue to enjoy the growth dividend of the industry.
Profit forecast and investment rating: we expect the company’s net profit attributable to the parent company from 2022 to 2024 to be 102 million yuan / 127 million yuan / 168 million yuan respectively, EPS to be 118 yuan, 147 yuan and 194 yuan respectively, and PE to be 40 / 32 / 24 times respectively. It will be covered for the first time and rated as “overweight”.
Risk tips: 1) food safety risks. 2) Operation risk caused by repeated covid-19 epidemic. 3) Raw material price fluctuation risk. 4) Industry competition intensifies risks. 5) The construction of the project invested with raised funds is less than the expected risk.
