\u3000\u3 Bohai Water Industry Co.Ltd(000605) 499 Eastroc Beverage (Group) Co.Ltd(605499) )
Event: the company disclosed the first quarterly report of 2022. In 1q22, the company achieved a revenue of 2.01 billion yuan, a year-on-year increase of + 17.3%; The net profit attributable to the parent company was 340 million yuan, a year-on-year increase of + 0.8%.
Key points supporting rating
Under the influence of the epidemic, revenue grew steadily, and the increase of costs and expenses put pressure on profit growth. (1) 1q22’s revenue was + 17.3% year-on-year, and still achieved steady growth under the influence of the epidemic. We believe that the company’s channel expansion and market development have achieved some results. (2) 1q22’s gross profit margin was 43.2%, with a year-on-year increase of -3.1pct. The rising purchase price of bulk raw materials brought cost pressure. (3) In terms of expense rate, 1q22 company’s sales / management / Finance / R & D expense rate was + 0.4pct, + 0.3pct, + 0.5pct and -0.1pct respectively year-on-year. The increase in sales expense rate was mainly due to the increase in advertising and freezer delivery, and the increase in management expense rate was mainly due to the increase in management personnel salary and information investment. 1q22 company’s net profit attributable to the parent company was 17.2%, year-on-year -2.8pct.
Regions outside the province continued to grow rapidly, and the proportion of non energy drinks increased. (1) In terms of products, the revenue of 1q22 Dongpeng special drink was 1.91 billion yuan, a year-on-year increase of + 15.9%, accounting for 95.4%; The income from other beverages was 93 million yuan, a year-on-year increase of + 50.5%, accounting for 4.6%, accounting for + 1PCT. Driven by the 500ml gold bottle, Dongpeng special drink achieved steady growth, and the new non energy drinks continued to increase in volume and proportion. (2) In terms of sales area, 1q22 Guangdong regional revenue was 780 million yuan, a year-on-year increase of + 7.1%; The national regional (non provincial) income was 1.04 billion yuan, a year-on-year increase of + 25.6%; The revenue from direct and online channels was 180 million yuan, a year-on-year increase of + 19.9%. The market in Guangdong Province has maintained steady growth, the regions outside the province have continued to grow rapidly, and the proportion of revenue has continued to increase.
Outlook: the short-term influencing factors do not change the long-term growth logic, and the performance growth rate in the next few quarters is expected to improve month on month. (1) In the short term, the impact of the epidemic on end consumption and the cost pressure caused by the rise in the price of raw materials are still on, and the company is expected to respond through cost control, expense control and scale advantage. (2) In addition, the company will continue to grow steadily in terms of product size and product differentiation, which will gradually support the company’s long-term expansion of beverage industry. The company has carried out intensive cultivation in all channels in the advantageous market of Guangdong, expanded consumer groups and ensured rapid growth; Accelerating the pace of expansion outside the province is expected to continue the high growth rate. (3) We believe that the Growth Logic of the company is clear and we are still optimistic about the long-term development prospect of the company. 2. In the third quarter, if the epidemic situation can be eased and new products continue to be produced in large quantities, the company’s performance growth is expected to increase month on month and achieve rapid growth throughout the year.
Valuation
According to the first quarterly report, we adjusted the previous profit forecast and expected EPS of 3.54, 4.35 and 5.27 yuan in 22-24 years, with a year-on-year increase of + 18.6%, + 22.9% and + 21.1%, maintaining the overweight rating.
Main risks of rating
New product promotion and market development were not as expected, and the industry competition intensified.
