\u3000\u3000 Eastroc Beverage (Group) Co.Ltd(605499) (605499)
Event: the company disclosed the performance forecast of 2021. It is estimated that in 2021, the net profit attributable to the parent company will reach 1.15 to 1.25 billion yuan, with a year-on-year increase of 41.6% to 53.9%, and the net profit not attributable to the parent company will be deducted from 1.05 to 1.15 billion yuan, with a year-on-year increase of 30.5% to 42.9%. The net profit attributable to the parent company in the fourth quarter was 150-250 million yuan, a year-on-year increase of 43-135%.
Key points supporting rating
Channel expansion improves the market rate, product expansion expands the breadth of consumers. In 2021, the profit continued to grow rapidly, and the performance in the fourth quarter increased month on month. (1) In 2021, the company’s net profit attributable to the parent company is expected to increase by 41.6% to 53.9%. We believe that the company’s channel expansion + product expansion strategy has achieved initial results. In terms of channels, the company has intensively cultivated mature markets in Guangdong and continued to expand markets outside the province. We judge that the income of markets outside the province has maintained rapid growth throughout the year, and the proportion has increased. In terms of products, on the one hand, the company continues to invest and seize the share in the energy beverage track, on the other hand, it actively creates a “energy +” product line to meet the needs of different scenes and people and broaden the breadth of consumers. We judge that the annual energy beverage revenue grew steadily, and the non energy beverage revenue improved in the second half of the year. (2) The net profit in the fourth quarter was + 43% to + 135% year-on-year, and the non net profit was deducted from – 20% to + 76% year-on-year compared with the month on month increase in the second and third quarters. We judged that energy drinks maintained a rapid growth, new non energy drinks brought incremental growth, and non recurring profits and losses contributed greatly, thus promoting the rapid growth in the fourth quarter.
Outlook: functional drinks are still the main line of development, and markets outside the province and non energy drinks will bring a new growth curve. (1) The scale of the energy beverage industry has grown steadily, and the main competitors are still affected by trademark disputes, releasing a certain growth space for other competitors. The company’s products have differentiated competitive advantages. The continuous large volume of 500ml gold bottles + new products and expanding the consumer population will provide support for performance growth. (2) The national market has a large growth space and is still in the development stage. The company actively arranges in terms of products, channels, supply chain and brand building, which is expected to continue the rapid growth momentum in markets outside the province.
Valuation
According to the performance forecast, we adjusted the previous profit forecast. It is expected that the EPS in 21-23 will be 3.00, 3.80 and 4.67 yuan, with a year-on-year increase of + 47.6%, + 26.7% and + 23.0%. The energy beverage market is still vast. We are optimistic about the development route of channel expansion + product expansion of the company, and maintain the overweight rating in combination with the current valuation level.
Main risks of rating
New product promotion and market development were not as expected, and the industry competition intensified.
