\u3000\u3 Bohai Water Industry Co.Ltd(000605) 499 Eastroc Beverage (Group) Co.Ltd(605499) )
Event:
Eastroc Beverage (Group) Co.Ltd(605499) : the company released its first quarterly report, with an operating revenue of 2.007 billion, the same as + 17.26%; The net profit attributable to the parent company is 345 million, the same as + 0.81%; Deduct non net profit of RMB 331 million, the same as - 1.60%.
Key investment points:
1. The epidemic affected sales, and the increase in cost price led to a slightly lower profit than expected. Reasons: 1) the company's terminal dynamic sales were good in the fourth quarter of last year, the channel inventory in some regions was low in November 2021, and the Spring Festival was earlier, and the payment and delivery of the company in the new business year was earlier than that in previous years; 2) In Q1 this year, the epidemic situation in Guangdong base camp was severe, affecting demand scenarios and terminal sales; 3) Last year, the base number of Q1 was high, and the growth rate of the revenue end in 2022q1 fell. In terms of regions, the company's expansion trend outside the province remains unchanged, its dependence on sales in Guangdong is weakened, and the contribution income of East China, central China and Guangxi continues to increase. Among them, the growth rate in Guangdong slowed down, Q1 + 7.07% year-on-year to 785 million yuan, accounting for a decrease of 3.69 percentage points to 39.26%; East and central China maintained rapid growth, with a year-on-year increase of + 34.82% / 35.15% respectively, and the proportion increased by 1.56/1.82pct to 12.00% / 13.64% respectively. The profit side was mainly due to the high prices of raw materials and packaging materials such as sugar and pet, the obvious pressure on the cost side, and the net profit attributable to the parent company was basically flat, slightly lower than expected.
2. The gross profit margin decreased significantly, and the operating cash flow decreased due to the increase of repayment and prepayment to suppliers. Since last year, the cost prices of sugar and pet have continued to rise, but the company timely hoards goods and locks the price when pet is low. Therefore, the pet end has little impact on the cost throughout the year, and the gross profit margin is limited by the fluctuation of cost factors. Since this year, the cost pressure of raw materials and packaging materials has increased, and the company's Q1 gross profit margin has significantly decreased by 6.35pct to 43.19% year-on-year. On the expense side, although the company increased the investment in advertising expenses and the launch of freezers in the first quarter, and the sales expenses were + 20.45% year-on-year, the sales rate decreased by 2.81 PCT to 16.84% year-on-year. In addition, the income tax rate in the current period decreased by 0.4 PCT to 21.6%, and the proportion of income tax in total revenue decreased by 0.91 PCT year-on-year. Therefore, the net interest rate decreased by 2.8pct to 17.18% year-on-year. Q1 sales received 2.315 billion yuan, a year-on-year increase of + 28.56%, and the net cash flow from operating activities increased from - 35.95% to 291 million yuan, mainly due to the increase of repayment and prepayment to suppliers in the current period, and the cash paid for purchasing goods and receiving labor services increased by 61.32% year-on-year.
3. The industry competition pattern is improving, and the company is optimistic about the long-term growth under the national expansion. Energy drinks are still in the stage of rapid development. According to the data of the company's annual report, the growth rate of coffee drinks and energy drinks segment market in 2021 is ahead of that of soft drinks industry. Industry leader Red Bull is still limited, and the trademark dispute has stopped, which is good for local enterprises. In 2021, the sales volume of Dongpeng special beverage in China's energy beverage market increased from 27.0% to 31.7%, becoming the highest sales volume of energy beverage in China; The market share of sales increased from 20.2% to 23.4%, ranking second. Looking forward to 2022, the company's headquarters in Guangdong will continue to intensively cultivate channels and tap the sinking market demand. It is expected that the sales will be stable, the weak areas will be promoted smoothly, and there is still a large blank market outside the province. (1) On the product side, the large single product 500ml gold bottle meets the cost performance needs of the target group and continues to be in high volume. Last year, the company launched Zero sugar products, coffee beverage Dongpeng "big coffee" and female energy beverage "taneng" respectively in April, September and December, and developed taurine vitamin beverage. This year, it will continue to promote a new and rich "energy +" product matrix of functional drinks and expand its coverage of consumer groups, Including light energy drinks such as "Dongpeng sports special drink", "Dongpeng bubble special drink", 250ml new gold cans and 335ml slim cans, the contribution income of new products can be further increased. (2) On the channel side, the company promoted channel development and freezer launch last year. By the end of the year, there were 2312 dealers, and the annual sales network covered about 2.09 million terminal stores across the country, which increased rapidly compared with 1.79 million in the first half of last year, and there is still broad space compared with red bull. (3) On the brand side, the company expects to enhance brand awareness and reputation with the help of sports events. Dongpeng special drink has become the official designated drink of Hangzhou Asian Games and Shantou Asian Youth Conference. In addition, the company will deepen the brand symbol of "drinking Dongpeng special drink when tired and sleepy", tap demand scenes and create brand memory points. The improvement of brand strength is also conducive to the development of the company in the blank market and is optimistic about the long-term growth of the company.
4. The profit forecast and investment rating company is still in the stage of national expansion and still has potential in the north and North China. With the advantages of high cost performance, convenient carrying, good effect and good taste of the company's large single products, it is expected to take advantage of the time when Red Bull is deeply involved in the trademark dispute to realize rapid growth. The impact of the short-term epidemic is great. We reduce this year's profit performance. It is expected that the company's EPS will be 3.13/4.04/4.98 yuan in 2022 / 2023 / 2024, PE is 39 / 31 / 25 times, the valuation has been relatively reasonable, and the "buy" rating is given.
5. Risk tips (1) risks with single product structure and concentrated regional distribution; (2) The growth of energy beverage industry is less than expected; (3) Red Bull brand price reduction risk; (4) The company's core potential and market investment attraction are less than expected; (5) Food safety risks.
