\u3000\u3 Shengda Resources Co.Ltd(000603) 896 Zhejiang Shouxiangu Pharmaceutical Co.Ltd(603896) )
Event: the company released the first quarterly report of 2022. 1q22 achieved a revenue of 204 million yuan (+ 16.99%), a net profit attributable to shareholders of the listed company of 59 million yuan (+ 43.07%), a deduction of non net profit of 53 million yuan (+ 48.89%), and an eps0.5% 39 yuan (+ 39.29%). In 2021, the company achieved revenue of 767 million yuan (+ 20.61%), net profit attributable to parent company of 201 million yuan (+ 32.37%), net profit not attributable to parent company of 199 million yuan (+ 45.19%) and operating cash flow of 297 million yuan (+ 15.74%).
Continuous cultivation within the province + active expansion outside the province + rapid online development, and three pronged approach to boost high performance growth. In terms of revenue sources, in 2021, the sales in Zhejiang Province reached 482 million yuan (+ 19.1%), the sales outside Zhejiang Province reached 92 million yuan (+ 16.31%), and the sales of Internet business reached 185 million yuan (+ 27.33%). From 2019 to 2021, the company’s sales in the province accounted for 63.92%, 64.28% and 63.45% respectively. Zhejiang Province is the main sales area of the company, and the company’s products have significant brand advantages in the province; Among them, Hangzhou and Jinhua account for a relatively high proportion. In the future, with the increase of the share in Ningbo, Wenzhou and other cities with strong purchasing power, the company’s sales in the province are expected to maintain a high increase. The company also actively develops the market outside the province, adheres to the Trinity marketing strategy of “time-honored brands, hospitals and supermarkets”, vigorously recruits dealers outside the province (buyout), and vigorously develops Jiangsu, Shanghai and other key markets outside the province. As of 2022q1, the company has developed 14 dealers outside the province, including 4 new ones in Q1 in a single quarter. It is expected that the market outside the province is expected to accelerate. In addition, the proportion of the company’s Internet business continues to rise, and the proportion of Internet sales reached 24.4% in 2021. With the characteristics of less product specifications, transparent price and not easy to damage and deteriorate, the sales of the company’s products in tmall, jd.com and other online channels are growing rapidly, and the terminal price is relatively stable and dynamic sales are strong.
The whole chain process casts the products with high gross profit level, enriches the categories and meets the needs of diversified functions. By product category, in 2021, Ganoderma lucidum spore powder series products achieved a revenue of 536 million yuan (+ 18.3%), accounting for 86.66% of the revenue; The gross profit is 472 million yuan (+ 17.4%), accounting for 73.38%, which is the core product of the company. Another main product, Dendrobium candidum series, accounts for about 14.8% of the gross profit. The gross profit margin of Ganoderma lucidum spore powder series products has been stable at more than 88% for three consecutive years, which is the product with the highest gross profit margin; The gross profit margin of Dendrobium candidum series products is stable at more than 75%. The main reason is that the company has a closed-loop whole chain process from product planting to cultivation and then to processing. The company has high-quality breeding technology with independent intellectual property rights, scientific planting process with full traceability based on Internet of things technology, and exclusive wall removal and purification technology that can effectively improve the content of active ingredients. Among them, Ganoderma lucidum spore powder series products can be subdivided into: Ganoderma lucidum spore powder (broken wall), broken wall Ganoderma lucidum spore powder, broken wall Ganoderma lucidum spore powder particles and broken wall Ganoderma lucidum spore powder tablets, accounting for 20.71%, 29.13%, 16.24% and 4.44% respectively. Different categories have different use characteristics and price positioning to meet different functional needs such as disease conditioning, daily health care, gifts and gifts. At the same time, the company vigorously promotes the high-end product tablet Ganoderma lucidum spore powder, which will bring continuous improvement to the income structure.
Profit forecast and Valuation: considering the continuous growth of the company’s market in the province, the active expansion of markets outside the province and the improvement of Internet business sales, the company’s operating revenue is expected to be 970, 1211 and 1505 million yuan from 2022 to 2024, with a year-on-year increase of 26.4%, 24.9% and 24.3%; The net profit attributable to the parent company was 259 million yuan, 333 million yuan and 433 million yuan, with a year-on-year increase of 28.75%, 28.84% and 30.11%, and the corresponding PE was 28.15, 21.85 and 16.79 respectively, giving the investment rating of “buy”.
Risk warning: the impact of the epidemic on the sales of end products; The sales promotion inside and outside the province is less than expected; Macroeconomic downside risks.
