Nanqiao Food: domestic baking oil faucet, multi-category baking raw materials and frozen dough have entered a period of rapid growth. The company adheres to the concept of diversified development, more than 20 years to high-end baking oil, the continuous development of light cream, frozen dough, stuffing and other products, excellent business growth. The company's gross margin expense rate remained stable, with a substantial increase in revenue and profit in the first half of the year. 2021H1 achieved an operating income of 1.362 billion yuan, an increase of 38.62% over the same period last year, and a net profit of 195 million yuan, an increase of 63.00% over the same period last year.
Industry: baked goods boom racetrack momentum, frozen dough blue sea market is high in the sky and wide in the sea. The market size of baked goods in China is more than 200 billion yuan, the rise of B-end "baking +", the strong demand for lower rent and labor costs, and the increasing popularity of C-end household baking have promoted the increasing demand for high-quality baking raw materials and frozen dough downstream. Compared with Europe and the United States, there is still a lot of room for the permeability and industry scale of frozen dough in China. According to neutral estimates, the market size is expected to be nearly 22 billion yuan in 2025, and the CAGR in 19-25 is 25.56%.
Competitive advantage: high-quality products to create a good reputation, all-round service to help the development of channels. The company's R & D investment continues to increase, and continues to develop personalized products to meet customer needs. At the same time, the company has formed barriers in the manufacturing process, high quality has become a product feature, cream can be refrigerated, frozen dough can be fermented to help the company compete differently. In the channel side, the company provides customers with 360-degree omni-directional advisory marketing services, thanks to quality products and services, the company has high-quality customers and long-lasting cooperative relationship.
Growth-driven: capacity expansion to support business development, frozen dough power. The production and sales rate of all categories is higher than 95%. For this, the company will upgrade and transform the existing production line and greatly expand production to alleviate the capacity shortage. After the outbreak of frozen dough demand, the company will promote capacity expansion to match demand growth through multi-plant production, with capacity expansion, followed by the gradual expansion of new products. Frozen dough has a high gross margin, and the increase in the proportion of frozen dough after expanding production and boosting sales will help enhance the company's profitability.
Investment suggestion: we expect the total operating income of the company to be 30.26,37.25 and 4.496 billion yuan in 2023, an increase of 30.29%, 23.11% and 20.69% respectively over the same period last year. The net profit of 2021 in 2023 is 4.33,5.43 and 660 million yuan, and the year-on-year growth rate is 33.25%, 25.28% and 21.54%. The corresponding PE from 2021 to 2023 is 31.82X, 25.40X and 20.90X, respectively. The EPS from 2021 to 2023 was 1.02,1.28,1.56 yuan respectively. The average PE of comparable companies from 2021 to 2023 is 43.44X, 34.33X and 26.13X. Nanqiao Food has the advantage of valuation. Looking to the future, benefiting from the high prosperity of the baked food industry, the company's main baking oil business is expected to grow steadily, the frozen dough business will continue to increase with the release of production capacity, and the rapid development of light cream and imports is expected to contribute multiple growth poles for the company. optimistic about the company's long-term development, give "overweight" rating.
Risk tips: increased competition in the industry, fluctuations in raw material prices, new production capacity can not be digested and so on.
