Event: the company released the 2020 annual report and the 21-year quarterly report: 20-year revenue of 1.503 billion yuan, yoy+8.91%; return net profit of 136 million yuan, yoy+ 37.31%; deducted non-net profit of 129 million yuan, yoy 38.45%. 21Q1 realized revenue of 318 million yuan, yoy+15.95%; returned to its mother net profit of 30.0351 million yuan, yoy+23.11%; deducted non-net profit of 23.3954 million yuan, yoy+6.07%.

The slowdown in income growth is mainly affected by the epidemic situation and the adjustment of accounting standards, and Deya Milk is expected to accelerate. The company's 20Q4 and 21Q1 achieved income of 4.12 yuan and 318 million yuan respectively, which was-1.62% and + 15.95% respectively compared with the same period last year. The decline and slowdown in revenue growth was mainly affected by the adjustment of accounting standards. The hedging price payable to customers originally included in sales expenses reduced part of the current income. According to the category, the income of dairy products (Deya), beer, grain and oil, cereals and comprehensive food was 10.94,2.01,0.69,0.62 and 75 million yuan respectively, an increase of 13.2%, 12.6%,-9.4%,-0.3% and-20.6%, respectively. The share of income from dairy and beer increased 2.7pct and 0.4pct to 72.9% and 13.4%, respectively. The decline in income growth in Deya is mainly affected by the slowdown in customs declaration under the epidemic, the limitation of foreign production capacity and the adjustment of income guidelines, according to channel research, revenue is expected to grow by about 20% year-on-year. The growth of beer has accelerated, the decline in grains, oils and grains has slowed, and the improvement effect of setting up a division of the company in different categories last year began to show. In terms of different channels, online and offline revenue reached 8.7 and 630 million yuan respectively, which was + 20.2% and-3.5% respectively compared with the same period last year, and the proportion of online revenue increased to 57.9% by 5.5pct. Among them, online self-management and distribution grew the fastest, up 37.8% and 31.9% respectively, mainly due to the smooth progress of the company's development of e-commerce such as Dingdong shopping and simplicity. At the same time, online live streaming, Douyin, societies and other emerging channels are also booming to contribute to high growth.

Epidemic situation + optimization of channel structure promotes the increase of net interest rate. For the whole year of 2020, the gross profit margins of 20Q4 and 21Q1 are 34.2% (year-on-year-4.4pct), 32.5% (month-on-month + 0.3pct) and 30.2% respectively, and the sales expense rates are 20.6% (year-on-6.4pct), 20.7% (month-on-0.4pct) and 18.5%, respectively. The sharp decline in gross profit margin and sales expense rate is mainly affected by the adjustment of accounting standards. To sum up, for the whole year of 20, the gross sales differences of 20Q4 and 21Q1 were 13.6% (+ 2.1pct), 11.8% (month-on-0.1pct) and 11.6% respectively. The year-on-year increase was mainly due to the epidemic, the reduction of terminal sales promotion activities and the decrease of expenses. It is expected that the rate of sales expenses will increase slightly after returning to normal this year. For the whole year of 2020, the net interest rates of 20Q4 and 21Q1 were 9.04%, 8.08% (month-on-0.55pct) and 9.44%, respectively, due to government subsidies, and Q1 deducted the non-net interest rate of 7.35%. Considering the return to normal of promotional activities this year, the upward rate of expenses under equity payments and the optimization of channel structure to boost profitability, we expect the net interest rate this year to be about 7.5-8%, which is still higher than the level of 19 years and before.

It is expected that Deya and beer will accelerate their growth. 1) Deya Dairy: last year, the national demand for white milk increased, and the production capacity of the company's suppliers was tight. Last year, it began to increase production capacity to meet the demand of strategic growth. In the second half of 2021, the company invested in a new 200ML pure milk packaging line to be put into production, and at the same time increased the supply of 200ML to the company in the original capacity. It is expected that the total available capacity will increase by 130 million pieces per year, totaling about 2600 kilograms, which is 27% higher than that in 2019. The company will sink through new channels such as online live streaming and community group buying. 2) Beer: Pinwood set up a separate beer division in the second half of last year, and this year it may make efforts to open up food and beverage channels to contribute new increments.

The improvement of the consumption level of domestic residents and the convenience of online channels have created good conditions for imported food to enter the field of vision of consumers. It is optimistic that the company, as a leading imported food operator in China, continues to distribute and balance the omni-channel model, and constantly improve its own profit level. According to the changes in the company's 20-year performance and accounting standards, we adjust our profit forecast. It is estimated that the company's revenue from 2021 to 2023 will be RMB 1.843 billion, an increase of 23%, 29%, 27% and an estimated net profit of 1.42%, 1.87%, 242 million, an increase of 4.4%, 31.7%, 29.4% (excluding the incentive amortization charge of 19%, 25% and 24%), respectively, and a year-on-year increase of 4.4%, 31.7%, 29.4%, respectively, according to the company's 20-year performance and accounting standards changes. The EPS is 1.42cm 1.87max 2.42 yuan (the previous forecast value is 1.68max 2.21 yuan in 21-22 years), and the corresponding PE is 38X and 29X 22X respectively, maintaining the "buy" rating.

Risk tips: food safety risks, intensified competition in the industry, channel regional development is not as expected.