Report guide

Nanqiao Food is a leading baking oil enterprise, mainly producing and selling baked oil, light cream, imported dairy products, frozen dough and stuffing. We believe that with the rapid growth of the baking industry, upstream enterprises are expected to enjoy industry dividends; the company relies on competitive advantages, the steady growth of baking oil business, and the diversified development of cream and frozen dough business will drive the continuous growth of the company's follow-up performance.

Main points of investment

Nanqiao Food: the leading enterprise of baking oil and fat, the proportion of cream and frozen dough business is steadily increasing the company is a professional raw material supplier in China's baking industry, with an income of 2.873 billion yuan and a net profit of 368 million yuan in 2021, an increase of 13.27% over the same period last year. The company's core baking oil business has a 20-year income of 1.691 billion yuan, accounting for 58.84%. The income from imported dairy products / light cream / frozen dough and stuffing accounts for 17.48%, 16.61%, 6.18% and 0.89%, respectively. The company's distribution is mainly supplemented by direct marketing, and its sales range is throughout the country and some overseas regions.

Future growth: baked grease provides stable basic plate, frozen dough and cream business open follow-up space 1) baked grease: excellent market reputation, continuous deep ploughing channel is expected to achieve steady growth product positioning in the middle and high end, excellent market reputation. Baked grease, as the company's main source of revenue, accounts for more than 60%, maintaining steady growth as a whole (revenue declined slightly in 19-21 due to outbreaks and external demand). The company's baking oil mainly focuses on the middle and high-end product line, the unit price fluctuates little, and the product bargaining power is strong; at the same time, the company ploughs baked oil for many years, the brand and products have advantages, has a good market reputation, and the cooperative relationship with major customers is very stable.

Continuous ploughing channels, capacity expansion to ensure steady growth in follow-up performance. At present, the company's baking oil customers are mainly baking chain stores, its traditional baking stores account for about 75% of customers, and supporting to provide fine services to enhance customer stickiness. The follow-up company will continue to dig deep into the channels, layout and sink the market, and cooperate with new channels such as tea convenience stores. The baked oil production line planned by the fund-raising project is expected to increase the production capacity by 45000 tons per year to ensure the follow-up supply.

2) Frozen dough: focus on fermented frozen dough for differential competition, which has great potential for subsequent growth.

Differentiation competition to enhance market share: the company's frozen dough focuses on technically difficult fermentation products, with rich experience accumulation and a number of patented technical support. As the market accounts for a relatively high proportion of non-fermented Chinese pastries with relatively low technical barriers, the company's main fermented products have differentiated competitive advantages and can help the company.

Capacity release of high gross margin frozen dough business led to continuous growth: at present, Nanqiao frozen dough is in short supply, and the capacity utilization rate is as high as 139% in 2021, resulting in a serious shortage of production capacity. There will be a new production line in Shanghai and Tianjin respectively in 2022, when the production capacity will double, and the new capacity is expected to increase by 11000 tons after 2023. The gross profit margin of frozen dough in 2020 is 45.9%, which is higher than that of other businesses of the company. The increase in the proportion of frozen dough will boost the company's profitability.

3) Cream business: it is also growing and is expected to become a new performance driver industry opportunity β: the scale of the industry is growing rapidly and the substitution effect appears.

According to estimates, the current size of China's cream market is 16.5 billion yuan, and it is expected to achieve 37.2 billion yuan in 2025, with a CAGR of 17.66% in five years, achieving rapid growth. Mainly: the cream demand of ① traditional baking channel increases with the growth of baking market demand; the rapid rise of ② tea industry brings new demand increment to the cream industry.

The substitution effect appears, and the traditional fat-planting cream is gradually replaced. Because traditional vegetable fat cream contains trans fatty acids. With the increase of health awareness, consumers tend to consume trans-free fatty acid cream. At the same time, in the context of rising consumption, blended cream or creamy cream with better taste will be more popular.

Company advantage α: current tea "All in one", create non-hydrogenated high-end cream product ① in the face of the rapid rise of the current tea market targeted to launch the "All in one" concept of frost enjoy JoyQ cream, can be widely used in thick milk, milk cover, snow top and other uses to increase the added value of tea, has been recognized and sought after by tea stores.

② does not have traditional vegetable cream products in its cream business and focuses on creating high-quality mixed fat cream and imported cream. By December 2020, all cream has been achieved free of trans fatty acids. Qiaoyi 800, the main product, is the only refrigerated mixed fat cream in China, which tastes better and has better quality than frozen cream. Imported dairy products have been cooperating with European brands for many years. Miji cream cream series contains 38% milk and has excellent quality, and the product is expected to occupy a higher market share.

Profit forecast and valuation

We expect the company's operating income from 2022 to 2024 to be 33.7 million yuan, 39.19 million yuan, respectively, an increase of 17.30%, 16.30% and 21.16% respectively over the same period last year. The net profit realized by the company was 3.69 billion yuan, 24.54% and 29.88% respectively, with an increase of 0.09%, 24.54% and 29.88% respectively. As a result, it is estimated that the EPS of the company from 2022 to 2024 is 0.86, 1.07, 1.39 yuan, respectively, and the corresponding PE is 24.33, 19.54 and 15.04 times, respectively. We select comparable companies in the baking industry that are similar or similar to the company's business, and as of May 20, 2022, according to Wind's consensus expectations, the industry's average valuation in 2022 is 29.16 times. We give Nanqiao Food 30-35 times PE in 2022, corresponding to the current price, there is still room for coverage for the first time, giving a "overweight" rating.

Risk tips: food safety risk, raw material price fluctuation risk, capacity digestion is not as expected