Event

The company issued 2021 and 22Q1 performance announcement: 2021 income 1.76 billion (- 15.3%), return net profit-80 million yuan (- 145.5%); single Q4 income 560 million yuan (+ 13.0%), home net profit-80 million yuan (- 322.8%); 22Q1 income 520 million (1.1%), home net profit 1 million yuan (- 97.8%), performance lower than expected.

Comment

Product structure adjustment and upgrading, price increase driving revenue growth

In 2021, the revenue of soy sauce / vegetable oil, the main category, was 860 million / 550 million respectively, compared with-15.3% of the same period last year, and 14.2% of the same period last year. The revenue of the sketch category (mainly vinegar, chicken essence, monosodium glutamate and other products) was 340 million, which was-17.3% of the same period last year. The decline in income is mainly due to the impact of community group buying and the decline of consumer demand, which has carried out a large number of product promotion and gift activities for the preservation market, resulting in a decline in customer unit prices. The company has raised the price of its products in November 2021, with a price increase of 3%, 7%, and the new price transmission has been basically completed. it is expected that with the acceleration of the process of product structure adjustment, the proportion of high-end prices with products will increase rapidly, and the price increase will drive higher revenue growth.

Actively optimize the dealer structure and speed up the coverage of terminal outlets

In 2021, the revenue of Central China / East China / Southwest / South China / North China / Northwest / Northeast China was-18.2% 19.3% and 7.6% respectively compared with the same period last year. 12.4% 12.4% and 1.1% of dealers in Central / East / Southwest / South China / North China / Northwest / Northeast respectively. The company's "three expansion" (expanding dealers, channels, expanding terminal outlets) strategy has achieved certain results, further tamping the stock market. In the future, the company will continue to deepen the traditional channels, explore the big business model with dealers, and integrate national channel resources more efficiently; and has begun to layout new media, community group buying, catering and other new channels to open up the incremental market.

Profitability needs to be improved, and short-term performance is expected to improve.

1) profit side: 2021 / single Q4/22Q1 gross profit margin is 20.1%, 16.8%, 18.74%, respectively, year-on-year-9.0pct/-4.2pct/-6.5pct, mainly due to the rising cost of raw materials. The net interest rate of 2021 / single Q4/22Q1 homing is-4.6%, 14.7%, 0.1%, compared with the same period last year. This is mainly due to the company's efforts to stabilize market share and expand new business areas, increase product promotion efforts, and increase front-line market business personnel and cost investment.

2) expense side: in 2021, the company's sales / management / R & D / financial expense rates were respectively year-on-year + 3.3pct/+2.0pct/+0.1pct/-0.3pct, and 21Q4's sales / management / R & D / financial expense rates were respectively year-on-year + 12.0pct/+1.9pct/+0.5pct/+0.9pct. Due to the company's business adjustment in 2021, various expenses increased significantly. 22Q1 sales / management / R & D / financial expense rates are respectively year-on-year + 3.2pct/+0.01pct/+0.2pct/+0.5pct, and it is expected that the cost effect will be reflected quarter by quarter in 2022, and the company's performance is expected to be greatly improved in 2022 under cost control and retrenchment.

Profound changes in management structure, medium-and long-term performance flexibility can be expected.

In the medium and long term, the organizational change of the company continues to deepen, and the performance flexibility can be expected under the cost reduction and efficiency. 1) Strategic focus and clear play: the company's salt reduction product matrix is perfect, covering all channels and price belts, which can be attacked and defended.

The company tilts resources for investment, and the profit margin of the channel is higher than 10% of ordinary products by 15%. At the same time, dealers are given additional rebates, and the channel thrust is sufficient. At this stage, we will focus on promoting the moving sales of more than 100 million markets and high-line markets, and create all kinds of model dynamic sales models, which are expected to be replicated nationwide in the future; 2) the organizational structure reform will provide bottom support: the company has specially set up a salt reduction division, focusing on assessing the proportion of salt reduction products, integrating supply chain departments, improving front desk operation and service efficiency, speeding up delivery speed, and reducing dealer inventory pressure, which will help to enhance dealers' willingness to cooperate.

Profit forecast and valuation

From 2022 to 2024, we estimate that the company's revenue growth will be 14.2%, 16.2% and 13.8% respectively; the growth rate of net profit will be 183.7%, 40.2% and 22.1% respectively; the PE will be 0.13,0.18,0.22 yuan per share; and the EPS will be 28,20 and 17 times respectively.

Risk hint

The progress of channel expansion is lower than expected, raw material prices rise, and food safety risks.