Consolidate the basic market in the fresh food sector and boost the beverage and leisure sector

At present, the company has formed a production line pattern based on fresh soy products, with plant-based protein drinks and casual soy products as development priorities, and complementing other types of products, with more than 400 product categories. 1) Fresh soy products: accounting for about 60%. In 2022, the “Aunt Cai” series was launched as a strategic product, setting up fresh food and beverage channels to meet popular demand; 2) Plant-based protein drinks: Team building has been completed, and efforts will be focused in 2023, which is expected to use advantageous channels such as fresh supermarkets and farmers' markets to achieve rapid sales, while opening up online e-commerce channels. On the product side, the plan focuses on promoting the “Nourish Yourself” whole soy milk series and corn juice to follow the trend of low-sugar, low-fat, healthy drink consumption. 3) Leisure soy products: including categories such as casual dried beans, casual bean rolls, casual vegetarian meat, etc., with brand promotion as the lead, strengthening supermarket and dealer channel construction and expanding product coverage.

Endogenesis goes hand in hand, and profitability is expected to be restored

Currently, the company mainly develops markets through self-construction, acquisition or joint cooperation. The layout is mainly in provincial capitals such as Beijing-Tianjin-Hebei, Yangtze River Delta, and Pearl River Delta. It is expected that in 2023, it will focus on deepening the Anhui and Shanghai markets. Outreach: A joint venture with Beijing Xiangxiang has now been set up. The joint venture projects with Guizhou Longyuansheng and Taiyuan Golden Soybean are expected to be implemented as soon as possible. The fruit and fruit project with Nanjing is expected to be launched next year. Through epitaxial acquisitions, on the one hand, the company can tap strong regional brands and grasp local resources and characteristics; on the other hand, it is conducive to forming synergies in procurement, production, channels, management, etc. Endogenous: The company has set up three production bases in Hangzhou, Anji and Yangzhou. The Yangzhou plant is expected to be put into operation by the end of this year. We expect the company's revenue to continue to grow in double digits in 2022, and profits are expected to recover in 2023.

Profit forecasting

EPS for 2022-2024 is expected to be 0.39/0.64/0.87 yuan, and the current stock price corresponding to PE is 66/40/29 times respectively. This is covered for the first time, giving a “buy” investment rating.

Risk warning

Macroeconomic downturn risks, mergers and acquisitions falling short of expectations, risk of rising raw materials, promotion of new products falling short of expectations, etc.