Zhou's Black Duck: a leading brand and retailer of leisure lo mei

Zhou's Black Duck is an enterprise specializing in the production, marketing and retail of leisure cooked halogen products. The company's main business is stewed duck, duck by-products, stewed red meat, stewed vegetables, stewed poultry and aquatic products and other products. At present, the main forms of product packaging are modified atmosphere packaging, vacuum particle packaging and so on. The company's business network is all over the country. by the end of 2021, the company has a total of 2781 stores in China, with four modern factories in Wuhan, Hubei, Cangzhou, Hebei, Dongguan, Guangdong and Nantong, Jiangsu.

The company's operating income and profits began to decline in 2018, and the impact of the epidemic began to be prominent in 2020. With the weakening of the impact of the epidemic in 2021, the company's revenue and total sales rebounded.

Industry Analysis: boom continues and Brand accelerates

The scale of China's halogen industry reached 329.6 billion yuan in 2021, with a compound growth rate of 12.3% from 2018 to 2021. With the continuous improvement of national living standards and the expansion of consumer demand, the consumption scene of halogen products is increasing day by day, which promotes the further development of the industry. It is estimated that the scale of China's halogen industry will reach 405.1 billion yuan in 2023. At present, food halogen products account for about 60%, leisure halogen products account for 40%.

In recent years, the consumption of leisure halogen products has a good momentum of development, and the market share is expected to continue to increase in the future; from the internal point of view of the track, there is still room for improvement in concentration, and we are optimistic about the rapid expansion of leading companies. From the perspective of product form, the trend of branding and packaging is still advancing; from the perspective of consumer attributes, the needs of a new generation of young consumers may give birth to new opportunities. With the continuous development and deepening of the halogenated food industry, the circulation channel of halogenated food has developed from the traditional single-store and small workshop management model to the present state of coexistence of multi-level and multi-channel sales.

Short-term reversal: demand repair, store expansion and cash

On the basis of the gradual control of the epidemic in the future, the company's business is expected to rebound gradually. In terms of proprietary business, the company's transportation hub stores have a greater impact on the direct business, and the passenger volume of 2022Q1 railway, civil aviation and highway has recovered to 55.2%, 47.0% and 28.8% of 2019Q1 respectively, especially in March. Passenger flow repair is expected to bring greater flexibility to the company's related business after the epidemic.

In terms of franchise business, more than 1500 franchise stores have been opened since the end of 2019, and the company has gradually launched community stores and tilted to the sinking market to disperse the risk of a long tail of the epidemic. By the end of 2021, the proportion of the company's stores in third-tier cities and below has exceeded 30%. In the future, the opening of franchised stores will continue to accelerate, contributing to the smooth progress of the target of 1000 stores for the whole year.

Long-term strategy: six breakthroughs to generate income and improve efficiency

The company began to put forward six major development strategies in the second half of 2019, and it is progressing smoothly: (1) Business model: the franchise model is parallel with the direct operation model, and the store coverage opens rapidly. at the end of 2021, the number of licensed stores exceeds 1500, accounting for more than half of the total; (2) channels:

Continue to implement the online and offline full coverage sales model, and increase the contribution of new channels to revenue; (3) marketing: adapting to the preferences of young consumers in terms of store image, product packaging, promotion, etc.; (4) R & D of new products: actively tracking emerging consumption trends, the contribution income of new products in 2021 exceeds 500 million yuan, accounting for 18%. (4) supply chain: an integrated supply chain center was established in January 2021, and four highly automated production centers with a cleanliness of 100,000 spaces have been set up in North, Central, South and East China; (5) organizational strength: in terms of senior management team, the introduction of experienced professional management team, the company has implemented diversified incentive and training programs.

Profit forecast and investment advice

Under the background of current demand repair expectation, shop expansion speed up and efficiency optimization, the company's annual profit from 2022 to 2024 is expected to be 1.40,5.11 and 650 million yuan respectively, and the stock price is valued at 79x, 22x and 17x respectively, giving a "buy" rating.

Risk hint

1. the repair of industry demand is not as expected; the competition in the industry is intensified.

2. The progress of the company's store opening is not as expected, and the price of raw materials fluctuates greatly.