Main points of investment
In 2017, the company will have a distinct strategic layout in channels and products, coexist with extension expectations, and revenue is expected to speed up. At the same time, the new salt reform policy is expected to reduce the cost of soy sauce products and hedge against the rising pressure of some raw materials.
In terms of channels: the layout of commercial supermarkets will be increased in 2017, with full channel coverage. At present, the company's sales channels are mainly circulation (wholesale markets and farmers' markets, etc.). At present, there are more than 1200 exclusive dealers, and the proportion of merchant excess is still low (at present, the proportion of channels: circulation 50%, merchant excess ~ 40%, catering 7-8%). Since 2014, the company began to increase the distribution of merchant super channels, focusing on promoting the coverage of commercial supermarkets in first-and second-tier cities, and has achieved considerable results. In our grass-roots research in Changsha and Tianjin, we found that the volume of stores in Carrefour and China Resources Wanjia reached 6% and 20% respectively, both of which were close to the seasoning leader Haitian flavor industry. In 2017, the company will still focus on the layout of Shang Chao in its channel development. Liu Yongjiao, the new general manager, was once the deputy general manager in charge of the company's sales, and the company's resources are expected to be close to channel marketing to make up for the current channel deficiency.
In terms of products: continue the large single product strategy to strengthen the brand image, while the extension is expected to remain. Since 2015, the company began to promote the strategy of large single products, and now it has achieved considerable results. Noodles rarely maintain double-digit income growth. In 2016, the volume is about 160 million yuan, and the original brewing growth rate is slightly lower than that of noodles fresh, but it remains stable as a whole. In 2017, the company will continue the large single product strategy, the category is still based on noodle fresh and original brewing, superimposed layout super channel strategy, will strengthen the company's product image and help accelerate revenue. In addition, the company has an extension expectation on the strategic development of its products, and it is more likely to increase the product category through acquisition in 2017, with the main direction of acquisition in the food category, and there is no obvious preference in the category.
Cost: salt reform is conducive to market-oriented competition, hedging the rising pressure of some raw materials. Salt is one of the direct raw materials for the production of soy sauce, and it is also an important factor leading to the difference of gross profit margin of soy sauce production enterprises. The salt industry system reform began to be carried out in various provinces and cities on January 1 this year. After the salt reform, salt production enterprises can enter the field of circulation and sales, carry out cross-regional operation with their own brands, and the integration of production and marketing is conducive to enhanced competition and lower salt prices. For the company, the salt reform is expected to improve the transparency of salt prices and hedge against the rising pressure of some packaging materials. The new plant will still release some of its capacity in 2017, and depreciation will be included in the 2016 and 2017 statements.
The company's investment plant in Ningxiang is still in the stage of releasing capacity one after another: the new plant has a new design capacity of 200000 tons, while the capacity of the old plant of 120000 tons in Ningxiang will be phased out gradually, and the total capacity of the new plant is expected to reach more than 300,000 tons in the future. There are still tens of thousands of tons of capacity to be released in 2017. Part of the depreciation of the new plant in 2016 will be included in the statement, the scale is expected to be 3000-50 million yuan, 2017 depreciation will be fully recorded, the scale will be 6000-80 million yuan. Investment advice: the company's main condiment business is expected to usher in both channels and products on the outbreak. At the same time, the company is expected to store extension, product categories are expected to become more diverse, and help 17 years of overall revenue acceleration. We expect 2016-2017 income to be 1.9 billion (+ 8.2%) and 2.19 billion (+ 15.5%) respectively. Affected by the depreciation of the new plant, the net profit is 157 million (+ 6.5%) and 168 million (+ 7.0%) respectively, and the EPS is 0.14 yuan and 0.15 yuan respectively. Maintain the "overweight" rating and suggest active attention.
Risk hint
Food safety problems, the expansion of Shang Chao channels is weak, and the market competition pattern is intensified.