The epidemic situation and cost pressure remain, and there is a marginal improvement trend. 1) Quick frozen and prefabricated food: the revenue of the sector grew steadily in 2021, but the profit side was under short-term pressure due to the rise of raw material costs, production and electricity restrictions and other factors. 22q1’s revenue / deduction of non parent net profit were 9.7% / 28.3% year-on-year respectively. Affected by the epidemic, the growth of revenue slowed down, but the performance of some enterprises has shown a trend of improvement month on month; 2) Baked goods: in 2021, the baking sector maintained a high boom and its performance maintained high growth. After the year, the epidemic repeatedly made the consumer performance more cautious. At the same time, the rise in the price of raw materials such as soybeans put pressure on the profit. The revenue / deduction of non parent net profit of 22q1 sector were 8.8% / – 36.0% year-on-year respectively; 3) Meat products: affected by the decline of pig and meat prices and high base in 2021. The profit side was dragged down by the high base plus the impairment of frozen products. From 21q4, the performance growth rate changed from negative to positive with the rise of pig price.
There is more room to deal with cost pressure, and take multiple measures to improve profitability. Income side: the repeated epidemic has an impact on the terminal demand, and the income growth of enterprises generally slows down; Profit side: in 2021, the prices of major raw materials such as oil and soybean protein, packaging materials and transportation costs showed a year-on-year upward trend, resulting in pressure on the gross profit margin of relevant enterprises. 1) Quick frozen and prefabricated food: price adjustment was carried out by reducing sales promotion and directly raising prices, which alleviated the cost pressure to a certain extent, and the gross profit margin basically returned to the same level as that of the same period last year; 2) Baked goods: the cost pressure of 22q1 still exists. Enterprises actively take countermeasures to reduce the cost in all aspects through domestic substitution of raw materials, order locking and technical transformation. The cost pressure is expected to be improved in the future; 3) Meat products: benefiting from the decline of pig price month on month and the increase of sales volume of high gross profit products during the Spring Festival, the ton price of meat products has increased significantly; Cost rate: 1) most quick-frozen and prefabricated food enterprises are dominated by b-end, and the overall cost investment is stable. Under the background of the adjustment of accounting standards and the rise of costs, the promotion efforts of enterprises have slowed down, and the sales expense rate has generally decreased; 2) The sales expenses of baking enterprises have been reduced, and the cost investment efficiency has been improved under the cost pressure; 3) Meat products enterprises also reduced the sales expense rate; Net interest rate: enterprises actively respond to the rising cost of raw materials by raising prices and reducing promotion, and the net interest rate of some enterprises shows marginal improvement.
Annual outlook: optimistic about long-term demand recovery, waiting for marginal improvement
The quick freezing and prefabrication industry maintains a high boom and waits for the recovery of b-end demand: at present, the epidemic has repeatedly impacted the b-end consumption of quick freezing and prefabrication enterprises, but residents’ willingness to hoard goods has strengthened and the C-end consumption has increased. In the second half of this year, the epidemic is expected to be controlled, the catering end may recover, and quick-frozen and prefabricated food enterprises are expected to benefit from the demand growth dividend at both ends of B / C, contributing to the growth of annual performance. In addition, Anji, Sanquan, Qianwei and other enterprises actively make efforts to prepare vegetables, baking and other products, which is expected to bring new performance increment.
Optimistic about the long-term growth of the baking industry and waiting to be repaired under cost pressure: looking forward to Q2, with the gradual dissipation of the impact of the epidemic and the gradual recovery of logistics, multiple measures will be taken together in the future, which is expected to help the company improve its performance. In the long run, the demand for frozen baking has maintained high growth. Ligao Foods Co.Ltd(300973) as a leader in the frozen baking industry, it actively develops new products with prominent channel barriers. It is in the upward stage of capacity expansion and has broad growth space in the future.
The slaughtering profit of meat products enterprises is expected to increase and help accelerate the release of performance: the current downward price of pigs has helped meat products companies expand the scale of slaughtering business. It is expected that with the slowdown of the epidemic and the recovery of enterprise operation, meat products are expected to usher in a simultaneous increase in volume and profit and contribute to the flexibility of performance. In addition, the pig price may rise in the second half of the year. The inventory of high priced frozen meat in the early stage is basically digested, and the impairment is expected to be significantly reduced, further thickening the profit of slaughtering business and helping enterprises usher in a new era.
Risk tips: raw material price fluctuation risk, food safety risk, increased market competition risk, less than expected channel expansion risk, and increased epidemic risk.
