\u3000\u3000 Ligao Foods Co.Ltd(300973) (300973)
Event description:
The company announced the performance forecast for 21 years, with a revenue of RMB 2.78-2.85 billion, a year-on-year increase of + 53.6% – 57.5%, and a net profit attributable to the parent of RMB 275-295 million, a year-on-year increase of + 18.5% – 27.1%. 4q21’s revenue was RMB 820-890 million, a year-on-year increase of + 34.6% – 45.9%, and the net profit attributable to the parent company was RMB 77-97 million, a year-on-year increase of + 5.5% – 32.9%.
Sam’s large order will drive the high growth of frozen baking business, and the demand of supermarkets will remain strong. The development of China’s membership warehouse supermarkets has accelerated. According to Euromonitor, there were 178 stores in 21 years, with a year-on-year increase of + 39%, and the total retail sales was 23.82 billion yuan, with a year-on-year increase of + 42%. The high-quality supermarkets represented by Sam and the market opener are in line with the consumption upgrading trend, superimposed with the continuous layout of Chinese competitors, and the membership warehouse supermarket will continue to maintain a high degree of store expansion. As one of the largest suppliers of Sam’s bakery, the company will benefit from the increase in the number of Sam’s stores and the increase in the supply share of hemax and metro, although the increase in the same store revenue is limited by the supply proportion.
The shortage of bakeries is expected to ease this year, and the rising cycle of raw materials is conducive to the company’s expansion of customers. Since 2h21 entered the peak season, the bakery channel has been out of stock, suppressing new customer development and increasing penetration. With Weihui 4q21 and Huzhou put into operation in the middle of this year, the shortage of supply is expected to gradually ease. On the other hand, the rise in the price of raw materials has a direct impact on the profitability of cake shops. The cost control advantages of the company’s automatic production line and large-scale manufacturing are more prominent than manual manufacturing, thus promoting the expansion of the customer base of cake shops.
The release of production capacity is accelerated and the products are developed in echelons. The layout of the company’s three bases in South China, East China and central China has initially taken shape. According to the plan, it covers an area of 270 mu, 205 Mu and 108 Mu respectively. At present, it is still in the early stage of park development, and there is still a lot of new space for plants and production lines. In terms of products, doughnuts, sweet potatoes and tarts have increased steadily, frozen cakes (Swiss rolls and mousse cakes) are in high volume, and new products such as Dafu and frozen dough are expected to perform well this year.
Investment advice
Maintain the “buy” rating. With strong demand, accelerated production and high performance, the company continues to lead the frozen baking industry. In 21 years, the rise of raw materials and the allocation of equity incentive expenses suppressed the annual net profit growth. However, with the gradual maturity of the national supply chain, the profit growth is expected to pick up this year. It is estimated that the company’s revenue from 2021 to 2023 will be 2.782 billion yuan, 3.906 billion yuan and 5.512 billion yuan, with a year-on-year increase of 54% / 40% / 41%. The net profit attributable to the parent company was RMB 277 million, RMB 387 million and RMB 563 million, with a year-on-year increase of 19% / 40% / 46%. The EPS was 1.63, 2.28 and 3.32 respectively, and the corresponding PE was 71.0, 50.8 and 34.9 respectively, maintaining the “buy” rating.
Risk tips
The risks of sharp rise in raw material prices, food safety, new product promotion, new channel expansion and capacity construction are lower than expected.
