Events:

Guolian Fisheries released a report for the third quarter of 2022: the company achieved a total revenue of 3.948 billion yuan in the first three quarters, an increase of 19.68% over the same period last year, and a net profit of 52 million yuan, an increase of 364.00% over the same period last year, deducting 40 million yuan in non-net profit, an increase of 495.47% over the same period last year.

Main points of investment:

The growth momentum of prepared food business is relatively strong, and the performance continues to grow with high elasticity. The company's Q3 realized revenue of 1.534 billion yuan, an increase of 27.80% over the same period last year, and a net profit of 19 million yuan, an increase of 1816.34% over the same period last year. The non-net profit was 10 million yuan, an increase of 242.20% over the same period last year. The revenue of Q3 company has maintained steady growth, which is expected to be mainly due to the rapid growth of prefabricated food business, which is dominated by the rapid release of prefabricated vegetable products through Shang Chao and e-commerce channels, while the revenue base of the same period last year is relatively low, and Q3 revenue fell 11.85% last year compared with the same period last year. At the profit end, elastic growth is expected to be mainly due to the divestiture of the loss-making aquaculture business, the increase in the proportion of domestic business, and the reduction of the impact of impairment.

The proportion of domestic business maintained an upward trend, the impact of impairment factors continued to weaken, and the profit level further improved. The company's Q3 gross profit margin fell 5.65pct to 9.62% year-on-year, which is expected to be mainly due to a large increase in the cost of raw materials. In terms of cost, Q3 sales expense rate / management expense rate / R & D expense rate / financial expense rate respectively-0.72/-0.27/-0.15/-1.36pct, each expense rate has decreased, which is expected to be related to the income scale effect and the divestiture of aquaculture business. In addition, the proportion of impairment of the company's Q3 assets continued to decline, falling 3.44pct to 1.2% compared with the same period last year, mainly due to an increase in the proportion of domestic procurement of raw materials and domestic products. On the one hand, in the past, the company's shrimp products accounted for a large proportion and were mostly imported from overseas, and the import cycle was long, during which price fluctuations were easy to produce inventory impairment. In recent years, the company has strengthened the development of domestic fish deep processing products to play down the impact of instability in the import supply chain. On the other hand, since the trade friction between China and the United States in 2019, the company has gradually shifted the focus of channel development to China, and there are great differences in product shelf life requirements at home and abroad and in different subdivision channels, which leads to more asset impairment. With the gradual expansion of the domestic market, the impact of impairment continues to fade. Taken together, the company's Q3 net interest rate rose 1.17pct to 1.25% year-on-year.

Q4 performance is expected to continue high elastic growth, prefabricated product matrix and channel coverage continue to improve, optimistic about the future growth of the company. Looking forward to Q4, the company will launch new prefabricated dishes such as pineapple-flavored grilled fish, rainbow crispy fish market and pastoral fresh shrimp cake. in the environment of weak catering demand, the company is expected to maintain its growth momentum by driving C-end. At present, the company's prefabricated food products have entered a number of domestic KA supermarkets and e-commerce live broadcast channels, and the market feedback is good. It is expected to enter the Q4 peak season, the company's prefabricated food business will continue to achieve rapid growth on the basis of a continuously rich product matrix. On the profit side, the company has gradually spun off the loss-making aquaculture business, and with the orderly development of the domestic market, the impairment factors that drag on the profit side in recent years will gradually fade. In recent years, the company has made use of the advantages of its own aquatic supply chain to continue to expand the business of aquatic prefabricated dishes. First, it has focused on young target groups, maintained the frequency of new product launches, and launched "Little Tyrannosaurus Rex".

Grilled fish, seasoned crayfish, golden soup Boiled Fish with Pickled Cabbage and Chili, Qiwei fish fillet and other products, on the basis of continuous packaging upgrading and taste continuous innovation iteration. The second is to expand the ability of omni-channel coverage, in addition to providing product solutions for heavy customers, building comprehensive marketing networks such as circulation, Shang Chao and e-commerce, aiming at the main consumers of prefabricated dishes, the company has cooperated with customers such as Box Horse, Sam, Yonghui, Walmart Inc, Dazhang supermarket, Subway, Burger King and so on. The third is to increase the promotion of the "Little Tyrannosaurus Rex" brand and sign a contract with focus Media to increase brand exposure. In the long run, with a clear idea for the development of the company's prefabricated food business, and the expected release of 69000 tons of new production capacity as scheduled, the company is expected to rely on the advantages of procurement, research and development, quality control and cooperation in the aquatic industry over the years, as well as the basis for cooperation between catering and commercial customers. Stand out in the prefabricated food industry, profitability continues to improve.

Profit forecast and investment rating: we expect the company's 2022-2024 return net profit to be 0.75,1.58 and 280 million yuan, EPS is 0.08,0.17,0.31 yuan per share, corresponding to PE is 66-31-18 times, maintain the "overweight" rating.

Risk tips: 1) the promotion of new products is not up to expectations; 2) increased competition in the industry; 3) the risk of food safety; 4) the risk of the spread of COVID-19 epidemic; 5) the risk of upstream raw material price fluctuations; 6) the risk of export trade obstruction.