\u3000\u3000 Eastroc Beverage (Group) Co.Ltd(605499) (605499)
Event: the company recently released the annual performance forecast for 2021. In 2021, the net profit attributable to shareholders of listed companies was 1.15-1.25 billion, with a year-on-year increase of 41.61% – 53.93%. Net profit deducted from non parent company was RMB 1.05-1.15 billion, with a year-on-year increase of 30.45% – 42.87%.
The whole year ended smoothly and the profit was in line with expectations. According to the performance forecast, the company realized a net profit of 154-254 million in Q4, with a year-on-year growth rate of 43% – 135% and a deduction of non net profit of – 20% – 75%, which is in line with market expectations. In 2021, the company continued to optimize the product structure and customer structure. The three aspects of product brand channels were launched simultaneously. The channel side actively strengthened the development of traditional channels in the national market, continued to deeply cultivate the Guangdong market, improved the overall market rate and coverage of products, and the number of dealers and outlets continued to increase. On the one hand, the product side company continues to focus on the 500ml gold bottle, while building a “energy +” product line to meet the needs of different scenes and people, and constantly launch products to meet the differentiated needs. For example, it launched “0 sugar special drink” in April, launched “Dongpeng big coffee” to attack the ready to drink coffee competition in September, and launched in December that it can target the female group. In terms of production capacity, the company plans to establish production bases in Changsha, Hunan and Zhejiang, with a total of 12 production lines, which will provide support for the large-scale production of products in central and East China.
The growth of large single products continues to be verified, and the scale effect is expected to absorb the cost pressure. In the short term, the revenue side company has successfully developed the market outside the province with a large 500ml gold bottle, with good investment and distribution conditions and strong certainty. The cost side pet price has increased from 5000 yuan / ton at the end of 2020 to 8155 yuan / ton, an increase of 63%. It is expected that the gross profit margin will be under pressure in 2022, and the cost will suppress the net profit rate to a certain extent. However, with the continuous expansion of the company’s scale, the fixed cost will be diluted, As well as the increase in the proportion of 500ml, it is expected to absorb the negative impact of cost on net interest rate. In the medium term, the company continues to launch new products, the product matrix is becoming richer and richer, and the concern of relying on a single product revenue source is expected to be alleviated. In addition, oil Citrus Lemon tea will be re listed after adjusting its taste and packaging, and is expected to contribute to growth through channels such as catering and campus.
We believe that the energy beverage industry is a high-quality track with broad space, sticky consumption and rigid demand. From the perspective of industry structure, Red Bull still accounts for about 50% of the market share. However, due to the influence of trademark dispute, Red Bull has certain restrictions on advertising and channel laying, and other brands usher in development opportunities. As the leader of the second echelon, Dongpeng is more competitive than other enterprises. The management is deeply engaged in the beverage industry, the talents in the field of FMCG continue to join, the digital layout of channels is leading, the enterprise resources are focused, the brand continues to invest, and the sales team has strong combat effectiveness. It has successfully built a 500ml single product, which is expected to continuously improve the market share in the long run.
Profit forecast and Valuation: we expect the revenue growth rate to be 40%, 29%, 22% and profit growth rate to be 47%, 30% and 27% from 2021 to 2023. Considering the track where the company is located and future growth, we will maintain the buy rating, give 57 times PE in 2022 and the target price of 220 yuan, and maintain the buy rating.
Risk tip: the risk of rising raw material costs and intensifying industry competition.
