\u3000\u3 Bohai Water Industry Co.Ltd(000605) 338 Zhongyin Babi Food Co.Ltd(605338) )
Event:
Zhongyin Babi Food Co.Ltd(605338) released the first quarterly report of 2022. The company achieved revenue, net profit attributable to parent company and non net profit attributable to parent company deduction of 310 million yuan, 1.45 million yuan and 38.81 million yuan respectively, with a year-on-year increase of + 22.39%, – 89.46% and 192.61%.
Comments:
Revenue analysis: the group meal revenue continues to increase, the franchise stores contribute to the growth rate, and the performance of North China is excellent. In 2022, Q1 company achieved a revenue of 310 million yuan, a year-on-year increase of + 22.39%. From the perspective of splitting: 1) sub business: franchise revenue was 232 million yuan, a year-on-year increase of + 13.17%, direct business was 7.21 million yuan, a year-on-year increase of + 74.25%, group meal was 65 million yuan, a year-on-year increase of + 60.05%, and group meal and direct business grew rapidly; 2) By Region: the income of East China was 283 million yuan, a year-on-year increase of + 22.35%, and that of South China was 18 million yuan, a year-on-year increase of + 8.50%, which was mainly affected by the epidemic. The income of North China was 08 million yuan, a year-on-year increase of + 67.77%, mainly due to the low base and the inertia of sales growth. 3) Splitting of franchise business: Generally speaking, the growth of franchise revenue is mainly due to the growth of the number of stores– In terms of the number of stores, 22q1 company joined 4177 stores, with a net increase of 716 (798 newly opened / 82 reduced), including a net increase of 40 to 2950 stores in East China, a net decrease of 3 to 370 stores in South China (mainly affected by the epidemic in Shenzhen and Dongguan), a net increase of 3 to 144 stores in North China and an increase of 0 to 676 stores in Central China (mainly due to the consolidation of the acquisition company Wuhan Dexiang Zhongmao, including 247 Barbie brand stores)– Same store Revenue: the average single store revenue maintained a steady growth, and the penetration rate of takeout business continued to increase.
Profit analysis: the gross profit margin rises and the cost shrinks, driving the deduction of non upward. The net profit of 2022q1 was 1.45 million yuan, a year-on-year increase of – 89.46%, and the non net profit attributable to the parent company was 38.81 million yuan, a year-on-year increase of + 192.61%. The large difference between the non deduction and the growth rate of net profit was mainly due to the slight decline in the share price of Dongpeng special drink at the end of March compared with the end of 21, affecting the profit and loss of fair value changes of about 50 million yuan. 22q1 gross profit margin was 27.35%, year-on-year + 4.66pct, month on month -0.79pct, and the gross profit margin increased significantly year-on-year. The reasons are as follows: 1) pork price decreased year-on-year; 2) Songjiang phase II was put into operation in June of 20 years, and the production capacity climbed in 21 years, resulting in the rise of manufacturing cost, the release of production capacity in 22 years and the decline of manufacturing cost; The gross profit margin decreased slightly month on month, which was due to the reduction of income during the Spring Festival holiday but the occurrence of cost depreciation. During the period, the expense rate was 9.76%, with a year-on-year rate of -5.05pct, of which the sales expense rate was -7.58pct, mainly due to the targeted promotion of lock fresh decoration last year, the product launch strategy was adjusted this year, and there was no relevant advertising budget; The management expense rate is + 0.27pct year on year, and the financial expense rate is + 1.97pct year on year. 22q1 net profit attributable to the parent company was 0.47%, year-on-year -4.98pct, and non net profit attributable to the parent company was 12.54%, year-on-year + 7.29pct, which was mainly related to the increase of gross profit margin and the decrease of sales expense rate.
22 year Outlook: the short-term epidemic has an impact, the prospect of opening stores throughout the year is positive, and there are many highlights of profit growth. Looking forward to 22 years, we believe that 1) revenue side: in the short term, the scattered outbreak of the epidemic will have a certain impact on the operation of the company’s stores, but as a guarantee and supply unit, the company is expected to benefit from it. However, there are some difficulties in the company’s production capacity and employee recruitment under the epidemic, and we expect that the company’s revenue side will be affected to a certain extent, but the range is not large; Throughout the year, the company’s store opening strategy is positive and steady. Driven by takeout, the revenue of the same store is expected to continue to achieve high growth. In addition, in the region, central China, South China and North China are in the store potential energy releaser, which is expected to contribute to good revenue growth; 2) Cost side: due to the impact of the epidemic, pork prices in some areas will rise in the short term, but the company uses the period of low pork prices before and after the Spring Festival to reach contracts with suppliers to ensure that the overall price will not fluctuate much this year; 3) Profit side: the sales expense rate in 22 years is expected to remain stable and decline slightly. There is no large-scale advertising plan this year. Under the store opening effect, the advantages of brand marketing promotion are prominent. The staff salary is expected to be slightly lower than the revenue growth, and the profit growth is expected to be higher than the revenue growth.
Long term outlook: the track is naturally suitable for chain, the company’s ability is industry-leading, high growth and strong certainty in the early stage of growth, and is optimistic about the development of the company. From the point of view of the track, the required attributes bring high unit time conversion rate and repurchase rate of the store, ensuring the single store model of the category. From the perspective of the company’s ability, on the one hand, the company constructs an all-round daily distribution to store system of “close to stores, unified management, fast supply and maximizing quality and freshness”; On the other hand, the company has established a complete training system inside, and set up hierarchical management and incentive policies for franchisees outside the company, so as to realize the efficient management of franchisees through store supervision and communication mechanism and information system construction. In terms of life cycle, the company’s store model is polished well. At present, it is in the stage of national expansion in the early stage of growth, and the revenue growth is highly deterministic. With the increase of the number of stores, the brand effect is reflected, and the scale effect is prominent. In the long-term trend, the profit growth rate is higher than the revenue growth rate, so it is optimistic about the development of the company at the current stage.
Profit forecast and rating: give the company a “buy” rating. We estimate that the revenue growth rate in 22-24 years will be 21% (down), 23% and 22% respectively, the net profit growth rate will be – 19% (up), 21% and 23% respectively, the corresponding EPS will be 1.02 yuan, 1.24 yuan and 1.52 yuan respectively, and the deduction of non net profit growth rate will be 37% (up), 27% and 26% respectively. In the short term, the company’s stores will be affected by the epidemic situation, but the rise of group buying is expected to drive revenue growth. In the whole year, the company’s opening of stores in 22 years is stable, the same store is expected to continue high growth, pork prices run low + manufacturing costs decline, and the main business profit is expected to be higher than the revenue growth. In the medium and long term, the company is in the stage of national expansion in the early stage of growth, with strong certainty of high growth. Considering the current market environment, we valued 38x according to the performance in 2022, with a one-year target price of 38.8 yuan, maintaining the “buy” rating of the company.
Risk warning: industry competition intensifies; The opening of the store was not as expected; The epidemic brings uncertainty to the company’s operation; Price fluctuation of raw materials; Food safety issues;
