Event

On the evening of April 27, 2022, the company released its quarterly report for 2022: 2022Q1 revenue of 350 million yuan, an increase of 17.4%, a net profit of 28 million yuan, a decrease of 46.67%, and a deduction of 24 million yuan, a decrease of 49.75%.

Main points of investment

The epidemic affected the first quarter, and the rise in raw materials eroded some profits.

The company's 2022Q1 revenue was 350 million yuan, an increase of 17.4%, a net profit of 28 million yuan, a decrease of 46.67%, and a deduction of 24 million yuan, a decrease of 49.75%. The performance was in line with expectations, which was in line with the company's offline normal investment activities, but sales were not as expected due to the epidemic and other factors. Online live broadcasting efforts were increased, live broadcast costs were more invested, and sales expenses were increased. The gross profit margin of 2022Q1 is 44.78% (same as 5.7pct), which is due to the rising cost of raw materials, discounts and high freight charges for e-commerce. 2022Q1 net interest rate is 8.07% (same as minus 10pct), which is due to sales expense rate of 30.5% (same as increase of 5pct), management expense rate of 5.62% (same increase of 0.5pct), and business tax and additional ratio of 0.88% (unchanged) against the background of gross margin decline. The net cash flow of 2022Q1's business activities was 39 million yuan, an increase of 184%, due to an increase in cash received from the sale of goods and services. Among them, the rebate was 354 million yuan, an increase of 13.6%.

Hot food and cold food two-wheel drive, equity incentive has both opportunities and challenges

At present, the company strives for progress in stability, gives full play to the advantages of the whole industry chain and the influence of "the first Chinese oat grain brand in the world", continues to consolidate and enhance the dominant position of hot food oats, and actively carries out product upgrading and channel construction. increase brand investment, official publicity brand spokesman, enhance brand reputation. Promote the company's international research center of oat "whole industry chain breeding and cultivation" and cooperate deeply with the team of chief scientists of oat buckwheat technology system in China to form a "industry-university-research" model and establish a "West Wheat Oat exclusive Variety Research Technical team".

At present, the company's hot food and cold food two-wheel drive jointly promote the oat brand to become bigger and stronger. In order to mobilize its enthusiasm and creativity and effectively enhance the cohesion of the core team and the core competitiveness of the enterprise, the company launched the equity incentive scheme in February 2021; later, according to the changes in the consumer goods industry market and the actual operation of the company, the company adjusted the equity incentive scheme in December 2021, with 2020 as the base, requiring revenue growth of not less than 21% and net profit growth of no less than 15% in 2021. The growth rate of revenue in 2022 is not less than 33%, the growth rate of net profit is not less than 25%, the growth rate of revenue in 2023 is not less than 60%, and the growth rate of net profit is not less than 37%. Due to the impact of the epidemic in 2021, the target has not been achieved in 2021; we believe that with the recovery of consumption, the company is facing many opportunities and challenges, and the company strives to achieve the equity incentive target.

Profit forecast

We are optimistic about the reform of the company's products and channels, and the equity incentive target is expected to be achieved in 2022. We estimate that the EPS for 2022-2024 will be 0.54, 0.70, and 0.87 yuan, and the current share price will be multiple of 25-19-15 corresponding to PE, maintaining the "recommended" investment rating.

Risk hint

Macroeconomic downside risks, epidemic drag on consumption, the promotion of new products is not as expected, the promotion of cold food is not as expected, the flow of excess passengers is reduced, and so on.