\u3000\u3000 Zhongyin Babi Food Co.Ltd(605338) (605338)
Although the steamed stuffed bun is small, the chain market is large. The company is a Chinese pastry manufacturing enterprise, mainly selling Chinese pastries through chain franchise, supplemented by direct sales and group meals. The industry concentration of Chinese pastry quick-frozen food manufacturing industry is low, and the industry development has the characteristics of “large market, multi groups, small production and small scale”. The company’s products are mainly sold in small workshops. Regional and national chains are gradually replacing small workshops due to their standardized production and scale effect.
The company will open 8000 stores in the next few years, up to tens of thousands in the long term. The company originated in Shanghai and currently has more than 1200 stores in Shanghai. According to our calculation, the company still has 50% shop space in Shanghai and about twice the shop space in Jiangsu and Zhejiang. We estimate that the company still has an average of 1.8 times the opening space in the traditional opening area, and the number of stores can reach 8000. If we include densely populated areas such as central China, Anhui, Hebei and Shandong, there will be tens of thousands of stores in the future.
Three strategies to speed up shop opening. Although the company has a large space to open stores, the speed of opening stores in recent years is only about 300 / year, which is mainly affected by factors such as production capacity constraints, low single store income, large technical or financial obstacles to opening stores and so on. For these reasons, the company takes the following measures:
1. The company has no central factory in Central China, so it adopts the strategy of acquisition to expand its stores quickly and plans to acquire “Haolike” and “zaoyidian” in Wuhan. If the acquisition is successful, it may be consolidated in the first half of next year and the central China market is expected to be gradually opened. For new smart factories in Jiangsu and Anhui, it is expected that the Nanjing factory will be completed by the end of 2022, further opening markets in Northern Jiangsu and Anhui.
2. Improve the profitability of a single store. In addition to its own e-commerce platform Barbie mall, the company combines with the third-party e-commerce platform to operate online business, which expands the sales radius of stores and enables stores to undertake richer product categories. Then cooperate to strengthen the research and development of new products, launch key categories for different regions, improve short-term insurance products, carry out store decoration and upgrading, improve product image, and take multi pronged measures to improve the income level of single store. We estimate that the company’s single store income level this year will probably reach or exceed the level of the same period in 2019, which proves that the company’s strategy can better improve the single store income.
3. Reduce the threshold of opening a store and solve the obstacles of opening a store. Improve the frozen dough technology and reduce the technical difficulty of opening a store; Provide preferential policies for store opening and decoration subsidies to enhance brand awareness.
With the help of a number of policies, we speculate that the company’s store opening speed this year is significantly faster than that in previous years. With the increase of brand exposure in the region and the further promotion of various policies, the company is expected to continue to improve the store opening speed.
Profit forecast and rating: we predict that in the next few years, the same store revenue of the company’s stores will improve, South and central China are expected to make a rapid breakthrough, and the high growth rate of franchise business is supported. The group meal business of the company has always been an important growth point and is expected to maintain a growth rate of more than 40% in the future. It is predicted that the operating revenue of the company from 2021 to 2023 will be 1.359/1.732/2.016 billion yuan respectively, with a year-on-year increase of 39.40% / 27.49% / 16.32% respectively; The net profit attributable to the parent company was 294 / 243 / 284 million yuan respectively, with a year-on-year increase of 67.52% / 15.32% / 17.99% respectively; From 2021 to 2023, the corresponding PE is 30 / 36 / 31 times respectively, which is covered for the first time and given a “recommended” rating.
Risk warning: risks caused by epidemic situation; Food safety risks; The opening speed of the store was lower than expected; M & A is less than expected; Fluctuation risk of raw materials; The profit and loss of changes in fair value fluctuates greatly.
