This report is read as follows:
The performance in 2021 was lower than expected, while the performance of 2022Q1 slightly exceeded expectations. In 2022, the company gradually spun off the breeding business and focused on the prefabricated food business. The company continues to make efforts from product research and development and channel expansion, and profitability is expected to continue to improve.
Main points of investment:
Maintain the "overweight" rating and lower the target price to 6.00 yuan. Due to the company's expansion to the lower reaches, the continuous investment of fees, and the gradual divestiture of upstream farming business, the EPS from 2022 to 2023 was reduced to 0.005 yuan (0.10 yuan) / 0.12 yuan (0.13 yuan), and the EPS is expected to be 0.19 yuan in 2024. Based on the rapid development of prepared food business, the omni-channel layout continues to make efforts, giving the company 50 times PE in 2023, lowering the target price to 6 yuan and maintaining the "overweight" rating.
The company's 2021 annual report was lower than expected and slightly higher than expected in the first quarter of 2022. The company made a profit in the main business in 2021, but the loss in the breeding business was a drag on profitability, so the annual profit in 2021 was lower than expected. In the first quarter of 2022, the company's asset impairment loss and credit impairment loss decreased compared with the same period last year, and the profitability increased, so the 2022Q1 performance slightly exceeded expectations.
Focus on the main business, the core competitiveness is outstanding. The company has lost money in its breeding business for many years, which continues to be a drag on the company's profitability and cash flow. In 2022, the company will spin off the upstream aquaculture business and focus on the development of the main food industry. In the future, the bright spot of the company's development is in the food processing business, with 841 million in revenue from prefabricated vegetables in 2021, and 1 billion of the company's non-public offering will be used for central kitchen and aquatic products deep processing projects in 2021.
Continuous efforts in product research and development and channel development. In terms of product research and development, the company has developed a number of R & D projects, including grilled fish series, prefabricated vegetables, South American white shrimp series, freshwater fish series, etc., enriching product categories and increasing overall gross profit margin; in terms of channel expansion, the company has more than 3000 stores in 2021, 267 newly signed brand service providers and 52% urban coverage.
Risk tips: COVID-19 epidemic spread, food quality and safety, etc.
