Key points of investment:
The company released its 2021 quarterly report, and the performance was in line with expectations. The company achieved operating income of 468 million yuan (YOY +9.73%) in the first quarter of 2021, net profit attributable to shareholders of listed companies of 995.589 million yuan (YOY +41.03%), net profit of 95239 million yuan (YOY +27.26%) after deducting net profit of 95.239 million yuan (YOY +27.26%), and basic earnings per share of 0.08 yuan. The performance was in line with our expectations.
Profitability has improved markedly, and the cost rate has basically stabilized. 1) The company's gross margin for the first quarter of '21 was 31.94% (YOY+4.83PCT), net interest rate was 21.27% (YOY+4.72PCT), and profitability increased year-on-year. 2) The company's sales expenses for the first quarter of 2021 were 156.85 million yuan (YOY -8.56%), with an expense ratio of 3.35% (YOY -0.67pct); management expenses of 169.63 million yuan (YOY 130.72%), and the expense ratio was 3.62% (YOY +1.89pct), mainly due to the assumption of equity incentive expenses; financial expenses of 1,134 million yuan (YOY -78.04%), the cost rate 0.24% (YOY-0.97PCT), mainly due to reduced interest costs; R&D expenses It was 134.93 million yuan (YOY 104.69%), and the cost rate was 2.88% (YOY +1.34pct), mainly due to the company's increased investment in R&D. The cost side is generally stable, and management and R&D expenditure rates have increased.
Focus on the main business to increase gross profit and increase investment in R&D to optimize products. The company's gross profit and net profit situation increased significantly year-on-year in the first quarter, mainly due to an increase in gross profit from its main business products. This is consistent with the company's strategy of shrinking low margin business and focusing on high-margin main business disclosed in the 2020 annual report, and indicates that this strategy is gradually taking effect. On the other hand, the company's R&D expenses increased year-on-year, reflecting the company's investment in product development.
The prospects for the global vegetable protein market are broad, and plant-based meat is entering the Chinese market at an accelerated pace. Research by research firm DataM Intelligence shows that the size of the global vegetable protein market is expected to grow at a compound annual growth rate of 13.44% between 2019 and 2026 and reach 42.5 billion US dollars by 2026. Among them, Asia accounts for 15% of the global vegetable protein market, while China accounts for 28% of Asia; the plant-based meat market is expected to grow at an annual rate of 15% over the next 5 years, eventually close to 30 billion US dollars, and China has a chance to become the world's largest plant-based meat market. Many plant-based meat racetrack players are already entering the Chinese market at an accelerated pace: in 2021, Shuangta Foods' customers, and Beyond Meat, a global leader in plant-based meat, announced a collaboration with Beijing Jin Dingxuan Restaurant to launch eight new dishes. The meat fillings used in the dishes are all made from pure plant-based ingredients and are not inferior to animal meat in terms of color and flavor; in addition, plant-based meat brand Hey Maet, which is jointly invested by Shuangta Foods, Uphonset Capital, and Tiantu Capital, combines plant-based meat with Chinese dishes to launch foods such as spicy noodles, ravioli, etc. Baicao Wei collaborated to launch the first plant-based meat rice dumpling. In the future, the pea protein produced by the company is expected to expand the domestic market through Hey Maet's deep processing.
Maintain profit forecasts and maintain holdings growth ratings. The company's overall net profit for 2021-2023 is estimated to be 455 million, 599, and 755 million yuan respectively, corresponding to PE 35, 27, and 21 times. The company is the leader in pea protein supply, and future production capacity expansion will improve performance. The company has officially entered the downstream plant-based meat field, with broad industry space, and maintained its stock growth rating.
Risk warning: rising raw material prices, changing market distribution, food hygiene and safety.