\u3000\u3000 Sichuan Teway Food Group Co.Ltd(603317) (603317)
Event:
Sichuan Teway Food Group Co.Ltd(603317) the announcement of performance pre deduction in 2021 was issued. The annual revenue, net profit attributable to parent and non attributable deduction were RMB 2.026 billion, RMB 179 million and RMB 116 million respectively, with a year-on-year increase of – 14.34%, – 50.96% and – 62.43% respectively; Among them, Q4 revenue, net profit attributable to the parent company and non net profit attributable to the parent company were 628 million yuan, 98 million yuan and 52 million yuan, respectively – 25.22%, + 123% and + 303% year-on-year.
Comments:
Revenue analysis: the destocking campaign is over, and the channel is benign to be launched. In 2021, the company achieved a revenue of RMB 2.026 billion, a year-on-year increase of – 14.34% (Q1: + 56.21%; Q2: – 15.41%; Q3: – 37.12%; Q4: – 25.22%). The income of 21q4 company continues to decline, which is mainly related to the recession of consumption and the change of the company’s strategy. Since 21h2, the company’s strategy has gradually shifted from achieving the sales target to focusing on the freshness of product date and the health of channel inventory. According to the channel research, 21q4 benefited from the decline of pork price, the company doubled the growth of winter adjustment, there was a tight balance between supply and demand in the re adjustment of hot pot bottom and pickled cabbage fish, and the channel inventory was basically cleared; According to the terminal survey, the date of products in all regions is within 2 months, and the channel de inventory campaign is basically over.
Profit analysis: low base + reduced promotion, and the profit of the current period increased greatly. In 2021, the net profit attributable to the parent company was 179 million yuan, with a year-on-year increase of – 50.96% (Q1: + 4.13%; Q2: – 104%; Q3: – 96.25%; Q4: + 123%). Over the past 21 years, the company has removed the inventory through promotion. Since Q4, the inventory has been basically cleared, the promotion efforts have been reduced, and the promotion expenses have been reduced. At the same time, 20q4 company has confirmed large advertising expenses. Under the dual influence, the net profit of the company in the fourth quarter has increased significantly.
22 year Outlook: inventory clearing meets the turning point, and the second recovery is waiting for flowers to bloom. 1) Revenue: on the one hand, according to the research of channels, terminals and companies, we believe that the company’s de inventory action has ended, and the strategic focus is more focused on date freshness and inventory health. In the future, the company’s channels are expected to enter a virtuous circle; On the other hand, consumption is expected to stabilize gradually in the future. Under the triple action of low inventory, stable consumption and low base, the company’s revenue is expected to gradually return to the fast lane of growth. 2) Profit: in the future, with the gradual emergence of scale advantages, the fixed type expense rate is expected to gradually decline, and the profit elasticity can be expected under the low base.
Future outlook: the industry will accelerate the liquidation, the leading enterprises are expected to benefit, and equity incentive will enable them. The future market space of the compound condiment industry is huge. At present, it is still in the early stage of industry development, and there are many participants in the category. In the past 21 years, due to the impact of sluggish demand in the consumer industry and community group purchase, compound condiment enterprises have also experienced a wave of clearing, and small enterprises have withdrawn passively. Enterprises with financial strength, product strength and brand strength, such as Tianwei and Yihai, are expected to benefit from it. At the same time, the equity incentive of the company is expected to be implemented in 22 years, so as to ensure the competition of enterprises and the high-speed and high-quality development of enterprises in terms of mechanism.
Profit forecast and rating: the company is in the golden period of the development of compound condiments, and the track is excellent. After 21 years of industry development difficulties, the industry liquidation has accelerated. We are optimistic about the company’s core competitiveness and development potential. In the short term, with the end of channel liquidation, the consumption has gradually stabilized, superimposing the 21-year low base, the company is expected to usher in a wave of high-quality growth, At the same time, equity incentive is expected to be implemented in 22 years, which will also provide mechanism guarantee. We expect the company’s revenue growth rate to be – 14%, 26% and 20% respectively from 2021 to 2023, and the profit growth rate to be – 50%, 97% and 33% respectively, corresponding to EPS of 0.24 yuan, 0.47 yuan and 0.63 yuan respectively. We give a 55x valuation according to the performance in 2022, with a one-year target price of 26 yuan to maintain the “overweight” rating of the company.
Risk warning: price fluctuation of raw materials; Deterioration of sales environment; The cost of raw materials is rising rapidly; Food safety issues.
