\u3000\u3 Shengda Resources Co.Ltd(000603) 517 Juewei Food Co.Ltd(603517) )
Event: the company released]2021 annual report and 2022 first quarter report. In 2021, the company achieved a revenue of 6.55 billion yuan (+ 24.1%) and a net profit attributable to the parent company of 980 million yuan (+ 39.9%); The net profit in the quarter was RMB 16.84 billion (+ 20.24 billion), of which the net profit in the quarter was attributable to the parent company (- 16.84 million). In 2022q1, the revenue was 1.69 billion yuan (+ 12.1%), and the net profit attributable to the parent company was 89.07 million yuan (- 62.2%), which was lower than the market expectation. Meanwhile, the company plans to distribute a cash dividend of 5.7 yuan (including tax) for every 10 shares.
The epidemic situation has repeatedly increased against the trend, with strong business resilience. 1. By category, in 2021, poultry products, livestock products, vegetable products and other fresh products achieved operating revenue of 4.33 billion yuan (+ 13%), 69.87 million yuan (+ 115%), 610 million yuan (+ 15.7%) and 590 million yuan (+ 28.7%) respectively. The repeated epidemic has reduced offline consumption scenarios, including a steep fall in consumption in high potential stores, pressure on the halogen products industry as a whole, and the company still achieved contrarian growth. 2. From the perspective of different channels, the sales of brine food and the management of franchisees achieved an operating revenue of 5.74 billion yuan (+ 17.3%) and 67.43 million yuan (- 1.5%) respectively. By the end of 2021, the company had 14000 stores in mainland China, with a net increase of 1315. Among them, stores with a store age of more than 2 years accounted for 68% and contributed 77% of the revenue. In addition, the number of stores and the proportion of revenue in the street, community and other scenes that are relatively less affected by the epidemic are 67% and 69% respectively. Under the epidemic, the business resilience is strong, and the revenue of single stores will recover to 91% in 2019 in 2021.
The cost side is under pressure and the ability of equity investment is outstanding. The overall gross profit margin was 31.7%, a year-on-year decrease of 1.8pp, mainly due to the impact of the epidemic on breeding and slaughtering activities, and the price of raw materials continued to rise. The sales expense ratio was 8%, with a year-on-year increase of 1.9pp; The management fee rate was 6.4%, with a year-on-year increase of 0.1pp; The R & D expense ratio was 0.6%, with a year-on-year increase of 0.4pp; The financial expense rate was 0.1%, with a year-on-year increase of 0.3pp. The overall net interest rate was 14.8%, with a year-on-year increase of 1.6pp, mainly due to the transfer of Jiangsu Hefu’s equity and Zhengzhou Qianweiyangchu Food Co.Ltd(001215) listing, resulting in an investment income of 220 million yuan.
Fixed increase fund-raising to build production capacity, endogenous + epitaxial growth double engine. 1. From the perspective of production capacity, the company plans to raise 1.18 billion yuan from no more than 35 specific investors for the construction of two production bases in Guangdong and Guangxi. It is expected to gradually release the production capacity of 90000 tons of halogen meat products and by-products, effectively alleviate the bottleneck of the company’s production capacity and continue to consolidate the leading position of halogen products. 2. Focusing on the core track of Luwei, the company made extensive equity investment in the form of direct investment + incubation exploration, laid out and built a food ecosystem, which complemented the endogenous growth of the company.
Profit forecast and investment suggestions. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be 1.1 billion yuan, 1.33 billion yuan and 1.58 billion yuan respectively, and the EPS will be 1.80 yuan, 2.17 yuan and 2.56 yuan respectively. The corresponding dynamic PE will be 24 times, 19 times and 16 times respectively, maintaining the “buy” rating.
Risk warning: the price of raw materials may fluctuate sharply; Food safety risks; Industry competition intensifies.
