\u3000\u3 China Vanke Co.Ltd(000002) 891 Yantai China Pet Foods Co.Ltd(002891) )
Performance review
On April 29, the company released its first quarterly report. 1q22 achieved a revenue of 793 million yuan, a year-on-year increase of + 41.58%; The net profit attributable to the parent company was 23 million yuan, a year-on-year increase of + 10.73%. The growth rate of revenue exceeded expectations and the performance met expectations.
Business analysis
Overseas revenue grew rapidly, and China's staple grain grew rapidly. 1q's revenue increased by 41.6%, mainly benefiting from: 1) the performance of overseas business exceeded expectations: both volume and price increased. On the one hand, based on high-quality quality and cost advantages, the company's share of major overseas customers further increased. On the other hand, affected by the rising cost of American chicken raw materials, the company has carried out two rounds of price increases since 1q21. At present, the third round of price increase is under negotiation. It is expected that the overall growth rate of 1q's overseas business will exceed 45%. 2) China business: the overall growth rate is about 25%. The expansion of categories is progressing smoothly. The dry food business maintains a high double-digit growth rate. It is expected that naughty and zeal will maintain steady growth.
The rise of exchange rate and cost leads to short-term pressure on profitability, and 2q profit can be repaired. 1q22 gross profit margin was 18.46% (year-on-year -3.4pct, month on month -0.53pct). The main reasons were as follows: ① the appreciation of RMB dragged down; ② Overseas chicken prices rose more, and the price increase lagged behind slightly; ③ The orders of dry grain business grew rapidly, and some orders were outsourced, which structurally affected the gross profit margin. In terms of expense rate, 1q sales / management / R & D / financial expense rate was 6.9% / 3.4%% / 1.5% / 0.79%, year-on-year -0.97 / - 0.72pct / - 0.22 / + 0.28pct, and the net interest rate was 3.46%, year-on-year -1.22pct. Since April, the RMB has entered the depreciation channel, the exchange rate suppression factors have weakened, the company's dry grain production capacity has been put into operation, the proportion of self-supporting has been increased, the profit structure has been optimized, the price increase of overseas business has been implemented, and the company's profit is expected to enter the upward repair channel from 2q.
The plan for convertible bonds was released, and China's category development driven growth accelerated. Relying on cost advantages and high-quality product quality in the medium and long term abroad, it is expected to steadily increase the share of major downstream customers and maintain steady growth. In China, the company issued a RMB 770 million convertible bond plan in the early stage for the in-depth layout of China's dry grain and wet grain projects. With the forward-looking layout of the supply chain, Chinese brands have gradually built a full category combination of snacks, wet grain and dry grain. In the medium term, we expect the growth of Chinese independent brands to accelerate.
Profit and investment forecast
We expect the company's EPS to be 0.61, 0.89 and 1.06 yuan in 22-24 years, and the current share price corresponding to PE is 33, 23 and 19 times respectively. Considering the optimization of the benefit pattern of the company's overseas business, the strategic layout of China's business categories is forward-looking and has prominent advantages, the valuation has fallen back to a historically low level, and the "buy" rating is maintained. Risk statement
Risks of intensified industry competition; Risk of exchange rate fluctuation; The construction of independent brand is less than expected; The performance is lower than expected due to excessive investment of expenses; The risk of goodwill impairment.
