Key elements of the report:
The core of the company's strategic planning is to establish a unique position with differentiation. At present, the promotion of high-end new original brewed soy sauce in Guangxi model market is relatively successful. After the fund-raising project is fully put into production, the experience is expected to be replicated throughout the country. Enterprise transformation and performance growth prospects are good. It is estimated that the company's 15-year and 16-year EPS is 0.38,0.50 yuan respectively (considering dilution after the rights issue), corresponding to the March 30th closing price of 14.64yuan PE is 39 times, 29 times, maintaining the company's "buy" rating.
Events:
The company publishes its 14-year annual report. Operating income was 1.685 billion, up 0.40% from a year earlier, while net profit belonging to shareholders of the parent company was 133 million, down 17.91% from a year earlier. EPS0.29 yuan per share.
Comments:
Soy sauce production capacity release is lower than expected. The company's soy sauce business revenue increased by 4.63% in 14 years, which was lower than the 11% growth rate of the entire soy sauce condiment manufacturing industry, and the release of 200000 tons of soy sauce production capacity was lower than expected. Sales in the vegetable oil business fell 5.9 per cent year-on-year, while revenue from the vegetable oil business fell 22 per cent year-on-year due to falling prices. In the past 14 years, the company has promoted the large single product strategy, focusing on the promotion of high-end new products, original brewed soy sauce, as well as the earlier noodle fresh soy sauce. Noodles fresh and original brewed account for more than 13% of the company's soy sauce revenue. The project with an annual output of 200000 tons of high-quality soy sauce is expected to be completed and put into production in April this year, of which the part of the soy sauce tank fermentation process will be completed and put into use before. the annual production of 10, 000 tons of high-quality tea seed oil project is expected to be completed in April this year.
The gross profit margin continues to improve and the expense rate increases. Over the past 14 years, the company's overall gross profit margin was 29.97%, an increase of 2.73% over the same period last year, of which the gross profit margin of soy sauce business was 36.25%, up 0.98% from the same period last year. It is judged that it is due to the decline in the cost of raw materials and the upgrading of product structure. The gross profit margin of vegetable oil business is 19.14%, which is 5.83% higher than the same period last year, which is judged to be the impact of the decline in the cost of purchased raw materials. The market development of high-end soy sauce makes the company's sales expenses grow rapidly, and the sales expense rate rises to 13.80% from 10.97% in 13 years, which makes the company's net profit decline compared with the same period last year.
The channels of Shang Chao have been expanded steadily. The company continues to increase the presence of national merchant super systems, such as RT-Mart, China Resources Wanjia, Walmart Inc, Renle, Yonghui, Su Guo, Century Lianhua, Auchan, Carrefour, Xinyijia and various local strong merchant super systems, with key products such as original brewing and fresh noodles on the shelves. Through regular promotional activities and trial shopping promotion, some areas have passed the period of new product introduction. Over the past 14 years, the company has introduced a number of high-quality dealers, and at present, it has formed a national sales network centering on Changsha, Zhengzhou and Langzhong production bases.
Major shareholders contributed 450 million to participate in the fixed increase, highlighting the confidence in development. The company plans to issue 42.33 million additional A shares to the controlling shareholder's excellent investment, raising about 450 million of the capital. Excellent Investment currently holds a 40.05% stake in the company, which will increase to 45.10% after the completion of the offering. The funds raised in this fixed increase will mainly be used to supplement working capital: first, the corresponding demand for working capital will increase after the new project is put into production; second, the investment in various expenses such as market development and brand construction will grow rapidly; third, the company will face larger follow-up capital expenditure on project construction in the future. Major shareholders inject capital into the company out of their own pocket, showing confidence in high growth in the future.
Through the determination of high-tech enterprises, the income tax rate has been reduced to 15%. The company recently announced that it has passed the recognition of high-tech enterprises in Hunan Province and obtained the "High-tech Enterprise Certificate" (certificate date: October 15, 2014). According to the relevant regulations, the company may, in accordance with the state's preferential tax policies for high-tech enterprises, apply for a reduction of the enterprise income tax rate from the original 25% to 15% within three years from the year it is qualified (2014-2016).
Investment suggestion: the core of the company's strategic planning is to establish a unique positioning with differentiation. At present, the promotion of high-end new original brewed soy sauce in Guangxi model market is relatively successful. After the fund-raising project is fully put into production, it is expected that the experience will be replicated throughout the country. Enterprise transformation and performance growth prospects are good. It is estimated that the company's 15-year and 16-year EPS is 0.38,0.50 yuan respectively (considering dilution after the rights issue), corresponding to the March 30th closing price of 14.64yuan PE is 39 times, 29 times, maintaining the company's "buy" rating.
Risk tips: 1, food safety risk; 2, a sharp rise in raw material prices; 3, market expansion is lower than expected
