\u3000\u3 Bohai Water Industry Co.Ltd(000605) 089 Suzhou Weizhixiang Food Co.Ltd(605089) )
Event: the company released the annual report of 2021 and the first quarterly report of 2022q1. In 2021, the company achieved a revenue of 770 million yuan, a year-on-year increase of + 22.8%, and a net profit attributable to the parent company of 130 million yuan, a year-on-year increase of + 6.1%; The revenue of single Q4 was 190 million yuan, a year-on-year increase of + 20.3%, and the net profit attributable to the parent company was 30 million yuan, a year-on-year increase of – 2.9%. In 2022q1, the revenue was 190 million yuan, a year-on-year increase of + 14.2%, and the net profit attributable to the parent company was 0.36 yuan, a year-on-year increase of + 21.9%.
The intensive cultivation of channels has achieved remarkable results, and the cost pressure restricts the performance. In 2021, the company’s revenue grew steadily, and the contribution of wholesale and e-commerce business increased. 1) Sub products: the company’s meat and poultry / aquatic products achieved a revenue of 530 / 200 million yuan respectively, with a year-on-year revenue of + 22.1% / + 21.8% respectively; 2) Sub channel: the company’s retail channel achieved a revenue of 480 million yuan, a year-on-year increase of + 12.3% (including 350 million yuan for franchise, a year-on-year increase of + 8.4%, 130 million yuan for distribution, a year-on-year increase of 24.3%), and wholesale / direct sales achieved a revenue of 240 / 20 million yuan, a year-on-year increase of 31.5% / 267.5%. The company achieved remarkable results in channel intensive cultivation. At the end of 2021, there were 1319 franchise stores / cooperative dealers / 381 wholesale customers respectively, and successfully built a chain franchise ecosystem around the farmers’ market. In addition, the company broadened its online e-commerce channels, and its products were sold on tmall and jd.com platforms in the form of self operated flagship stores, generating an income of 20 million yuan; 3) Sub regions: the main East China market was + 21.7% year-on-year, and North China / Central China / Southwest achieved high growth due to the impact of low base; 4) Profit side: the gross sales difference of the company in 2021 was 20.4%, with a year-on-year increase of -3.8pct, mainly due to the high price of raw materials, the reduction of gross profit margin and the increase of e-commerce logistics costs. The management expense ratio was 4.5%, with a year-on-year increase of + 1.3pct. The rising cost of raw materials and the increase of period expenses made the company’s net profit margin – 2.7pct to 17.4% year-on-year.
Q1 improved profitability and outstanding performance. 1) Product side: 22q1 meat and poultry / aquatic prefabricated dishes achieved revenue of 120 million yuan / 60 million yuan respectively, with a year-on-year increase of + 6.3% / + 50.7%. It is expected that the slowdown of meat and poultry growth is mainly affected by the price increase of beef products; 2) Channel side: the demand for retail channels is rising. In 22q1, the revenue was 130 million, a year-on-year increase of + 21.6%, of which the franchise stores contributed more than 100 million, a year-on-year increase of + 28.7%; 22q1: the number of franchise stores increased by 57 to 1376; 3) Profit side: the gross profit margin / net profit margin of 22q1 was 24.8% / 19.2% respectively, with a year-on-year increase of -4.3/1.7pct. The sales / management expense ratio was 4.1% / 3.8% respectively, with a year-on-year increase of – 2.2 / – 0.4pct. Under the pressure of cost, the company actively adjusted the product structure and improved the operation efficiency, and the cost side improved significantly. In the future, with the stabilization of raw material prices, it is expected to continue to increase the profit margin of the company.
We will actively develop new business forms and be optimistic about the continuous growth of market share for a long time. By the end of 2021, the main works of the project plant invested and constructed by the company have been completed, and the future production capacity will be increased from 1.5 T / A to 65000 T / A. In the face of the impact of the epidemic, the company took the initiative to strive for guaranteed supply of materials and force group purchase business, so as to effectively alleviate the impact of the epidemic on stores. With the promotion of C-end market education and the recovery of b-end demand, the company is expected to benefit from the B / C dual channel drive and the release of superimposed production capacity, which is expected to enjoy the growth of long slope and thick snow of prefabricated dishes track.
Profit forecast: it is estimated that the net profit attributable to the parent company in 2022 / 23 / 24 will be 170 / 230 / 270 million yuan, with a year-on-year increase of + 29.8% / 30.4% / 20.7% respectively, corresponding to pe35 / 27 / 22 times, maintaining the “overweight” rating.
Risk tip: the production capacity is lower than expected, the cost rises, the market competition intensifies, and the promotion of new products is lower than expected
