\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 2022: the company achieved a revenue of 7.210 billion yuan, a year-on-year increase of + 0.72%, a net profit attributable to the parent company of 1.829 billion yuan, a year-on-year increase of – 6.36%, and a net profit deducted of 1.791 billion yuan, a year-on-year increase of – 5.49%.
Key investment points:
Affected by the repeated epidemic and the continuous upward cost, the performance growth slowed down. The epidemic broke out again this year, and many cities were closed for prevention and control measures. The company’s main downstream catering consumption scenes were seriously damaged. Last year, Q4 raised prices and the Spring Festival was earlier, and the channels prepared goods in advance. There was a certain inventory digestion period, resulting in only a slight increase in the company’s Q1 revenue. Q1 profit is still under pressure, mainly due to the continuous rise in the prices of raw materials such as soybeans, oil and packaging materials. At the same time, the expenditure on purchasing raw materials increased significantly, and the net operating cash flow increased negatively from positive to negative to -1.082 billion yuan.
New categories such as vinegar and cooking wine continued to increase steadily, and the income was affected by channel adjustment. By category, the revenue of soy sauce, seasoning sauce and oyster sauce of the three main categories decreased by 0.53% / 8.61% / 3.17% year-on-year respectively. The catering end of the main categories accounted for a large proportion and was greatly affected by the epidemic, while the revenue of other categories increased by 9.7% year-on-year to 768 million yuan, accounting for 1.10 PCT to 11.32% year-on-year. New categories such as vinegar and cooking wine continued to grow in large quantities. In terms of subregions, it is mainly due to the decline of 9.27% and 7.25% in the central and western regions respectively, and the single digit growth in other regions. The overall net decrease in Q1 of the company was 291 dealers, among which there were more dealers in the west, central and North, with a decrease of 169 / 153 / 151 respectively. The main reason is that the company reduced some dealers to distributors because they are facing great market pressure and it is difficult to complete the assessment objectives. In addition, the company actively responded to the development trend of new channels, laid out new online retail platforms, and strengthened in-depth cooperation with e-commerce platforms such as community group purchase and Shida home. Q1 online business increased by 202.23% to 293 million yuan year-on-year.
Raw material costs continued to rise, leading to continued pressure on gross profit. The gross profit margin of Q1 company decreased by 2.77pct to 38.17% year-on-year. Last year, Q4 company raised the price of a full range of products. However, due to the continuous rise of raw material costs, the improvement of gross profit margin is still not obvious, which is the same as that of Q4 last year. In terms of expenses, in the face of the pressure of rising costs this year, the company still responded by actively reducing fees and increasing efficiency, and the sales expense rate and management expense rate decreased by 0.27pct and 0.16pct respectively. Q1 net interest rate decreased by 1.92pct to 25.37% year-on-year.
In the short term, we are still under the dual pressure of weak demand and rising costs, and actively adjust the long-term development of energy storage. Looking forward to the whole year, at present, the industry is greatly affected by the epidemic and needs to wait for the recovery of catering, and the profitability will gradually recover. Previously, the company transited the favorable price period by offering new products and products with long inventory cycle. Up to now, the price increase action of all channels has been basically completed, and the price increase effect is expected to be gradually reflected. The cost side will continue to control the upward pressure of costs by locking prices, reducing costs and increasing efficiency. In the long run, the impact of community group buying and inventory pressure are gradually alleviated. Under this round of cost squeeze, the market share of the industry is expected to further tilt to the top enterprises. Haitian is expected to continue to grow faster than the industry.
Profit forecast and investment rating: we expect the company to realize a net profit attributable to the parent company of RMB 7.45/86.4/10.1 billion from 2022 to 2024, with a year-on-year increase of + 12% / + 16% / + 17%, EPS of RMB 1.77/2.05/2.40/share and PE of 51 / 44 / 38 times respectively, which is rated as “overweight”.
Risk tips: 1) the price of raw materials rises sharply; 2) Intensified competition leads to sales falling short of expectations; 3) Food safety incidents; 4) The impact of the epidemic exceeded expectations; 5) The recovery of consumer demand did not meet expectations.
