\u3000\u3000 Ligao Foods Co.Ltd(300973) (300973)
Event:
The company released the performance forecast for 2021. It is estimated that the annual operating revenue will be 2.78 ~ 2.85 billion yuan, with a year-on-year increase of 53.62% ~ 57.49%, the net profit attributable to the parent company will be 275 ~ 295 million yuan, with a year-on-year increase of 18.49% ~ 27.10%, and the non net profit deducted will be 260 ~ 280 million yuan, with a year-on-year increase of 15.13% ~ 23.98%
Key investment points:
The Spring Festival was earlier, the industry continued to sell well, and the income maintained a high growth trend. It is estimated that the company’s Q4 will achieve a revenue of RMB 820-890 million, with a year-on-year increase of 34.4% ~ 45.8%, mainly due to 1) Q4 ushers in the traditional peak season of the baking industry, adding that the Spring Festival this year is earlier and the goods are prepared in advance; 2) The channel sales of supermarkets continued, and large single products such as cassava and frozen cake continued to be in large quantities. 3) Henan factory invested two new doughnut production lines, and the new production capacity of cassava basically met the channel demand. The growth rate of Q4 revenue is expected to be close to the upper limit of the range. We estimate that the revenue of frozen baked goods is expected to grow faster than the whole, and the year-on-year growth is expected to exceed 85%, accounting for nearly 65% of the total revenue.
The price increase responded to the cost pressure, and the proportion of doughnuts and other high margin frozen baking products increased. In terms of profitability, the industry as a whole is facing the pressure of rising prices of oil and other raw materials. The company responds by optimizing internal production management, optimizing and increasing the proportion of doughnuts and other high margin frozen baking products, and successively increases the prices of sauces, port tarts, milk cream, grape Tarts and other products with large amount of oil and raw materials, so as to effectively alleviate the cost pressure. It is expected that the net profit of Q4 will be 80 ~ 100 million yuan, Year on year growth of 5.5% ~ 32.8%. If the impact of excess awards and share based payment fees is added back in the whole year, the net profit attributable to the parent company is expected to increase by 33.6% – 42.2% year-on-year.
Looking forward to 2022, capacity release will support high growth, and profitability is expected to continue to improve. The company’s Henan factory has successfully put into operation doughnut, sweet potato and pastry production lines in 21q3. Doughnut and other products are rapidly full, and there is still a large demand gap after delivery. Therefore, the company will add a doughnut production line in Q4, and the Portuguese tart and frozen cake production lines will be put into operation in 2022. In addition, it is expected that some of the Zhejiang plants will be put into operation in the middle of 2022, mainly including grape tarts, doughnuts, cassava and other products, of which new products such as Dafu are in reserve or will become the next potential large single product. The continuous launch of production capacity will strongly support the benign and rapid growth of the company in the future, effectively solve the problem of limited production capacity of single products with high gross profit, and bring continuous improvement of profitability. In addition, 85 million yuan of share based payment expenses will be amortized in 2022, which is expected to be diluted with the high increase of income.
Profit forecast and investment rating: determined by the operation characteristics of the on-site baking industry, professional division of labor is the general trend of the industry. In addition to traditional cake shops, supermarkets, restaurants, hotels and other terminals continue to increase their demand for frozen baked food, but the current penetration rate is still very low, and there is still much room for improvement in the future. As the leader of frozen baked food, the company is expected to fully enjoy the development dividend of the industry with strong channel service capacity and scale advantages. We expect the net profit attributable to the parent company in 2021 / 2022 / 2023 to be RMB 292 / 368 / 472 million, EPS to be RMB 173 / 2.17/2.79/share, corresponding to 67 / 53 / 42 times of PE respectively, and “buy” rating will be given for the first time.
Risk tips: 1) the production capacity is lower than the expected risk; 2) Food quality and safety risks; 3) New product promotion does not meet the expected risk; 4) Price fluctuation risk of raw materials; 5) Industry competition intensifies risks.
