Summary of the event: on March 2, ancestral shares issued an announcement to sign a "Project Investment Cooperation Agreement" with the Management Committee of Wuhan Jiangxia Economic Development Zone, and to set up a wholly-owned or holding subsidiary in Jiangxia Economic Development Zone. 300 million yuan was invested in the construction of a production plant, including fresh bean products, plant protein drinks, leisure bean products, etc., with an estimated output value of 330 million yuan within five years after completion.
The expansion of the next city in different places, mergers and acquisitions and the construction of factories in other places will promote the expansion of the whole country. The ancestral name already has a certain brand awareness in the Yangtze River Delta region, and has a full market share in Hangzhou, Ningbo, Shaoxing and other cities, and has become a leading enterprise in the bean products industry in China. While stabilizing the advantages of the Yangtze River Delta, the ancestral name also carries out national expansion through mergers and acquisitions and the construction of factories in other places: (1) mergers and acquisitions, the company acquired a bean products factory in Yangzhou in 2008, which has formed a revenue scale of nearly 100 million, and will focus on completing the relocation of the Yangzhou factory in 2022. In 2021, it reached an equity investment with Nanjing Guoguo and Guizhou Longyuansheng. At present, it has assisted it in upgrading its digital management, connecting business and financial systems, and sending production and sales personnel to help improve quality control and strengthen market expansion. It is expected that the "Yangzhou experience" will be copied again to achieve rapid expansion in North China, the Pearl River Delta and other regions. (2) to build a factory in other places, the company built an Anji factory in 2010, equipped with high-end production lines in Japan, and became the company's most important production base. This time in Wuhan, that is, to copy the "Anji model" through the way of building factories in other places to "the next city". The reason for choosing Wuhan is, first of all, because Wuhan has a sufficient population base and can quickly digest fresh products; secondly, Wuhan does not have absolute leading brands, the market pattern is scattered, and there is no obvious barrier to entry, and it will be easier for the ancestral name to cooperate with the government to expand the channel; in addition, during the epidemic period, the ancestral name has been supplied to Wuhan through channels such as box horses, and it already has a certain brand awareness and channel basis locally.
Firmly optimistic about 22 years of development, the main industry continues to grow steadily, and the expansion of soybean planting area is expected to lead to a decline in costs.
We expect the company's income to achieve double-digit growth in 2022, mainly due to: (1) the demand for fresh bean products at home is relatively stable, and the company belongs to the "vegetable basket" enterprise in Hangzhou, giving priority to production and operation.
(2) A food and beverage business department is set up to connect B-end customers such as chain fast food and school canteens. It is expected that with the gradual repair of the catering industry, the catering sector will achieve rapid development. (3) East China will focus on the potential market of Shanghai and Anhui, improve the image of the storefront, plan the sales strategy and develop the market through multiple channels. Hangzhou and other advantageous markets are intensive ploughing and sinking to further supplement the sales terminal. In terms of cost, soybean prices are expected to remain high until May this year, while with the expansion of soybean acreage in core production areas such as Heilongjiang and Inner Mongolia, soybean prices are expected to decline gradually before the new purchasing season.
Investment suggestion: from 2021 to 2023, the company is expected to achieve revenue of 13.33 million yuan, 15.57 billion yuan, 14.8%, 14.8%, 0.61 million yuan, 0.91, 0.98, and 0.97 yuan, respectively, and the corresponding PE is 50X/31X/25X. Taking into account the steady development of the company's main business, and the performance growth potential brought about by remote expansion, maintain the "recommended" rating.
Risk tips: rapidly rising costs, less than expected expansion in other places, food safety risks, and so on.
