The brand upgrade in '20 led to a sharp increase in expenses and losses, and net profit reached a record high in Q21. Lai Yifen released its 2020 annual report, stating that in 2020, it achieved total revenue of 4,026 billion yuan, an increase of 0.59% over the previous year, and a net profit loss of 65.1954 million, a year-on-year decrease of 728.65%. The annual report explains the reason for the loss:
The company expanded channels, optimized the talent structure, and promoted brand upgrading and promotion. The company's sales expenses and management expenses increased dramatically, resulting in a loss in performance. In Q1 in '21, the company achieved revenue of 1,215 million yuan, a year-on-year decrease of 7.59%. The net profit was 80.2895 million yuan, an increase of 9.65% over the previous year, a record high. As the epidemic is under control, offline stores in Laiyifen are expected to steadily resume their growth trend and give full play to the advantages of its well-developed offline store network. At the same time, online channels continue to gain strength and continue to drive the company's profit growth.
Omni-channel sales of our own liquor brands to further enhance the company's food and beverage industry layout. Lai Yifen told investors on an interactive platform a few days ago that Shanghai Zuiai Liquor Co., Ltd., a wholly-owned subsidiary of the company, launched its own brand of sauce-flavored liquor product, Haipai Sauce-flavored 53° Zuiai Sauce-flavored Liquor last year to create a localized sauce-flavored liquor brand in Shanghai. Currently, it sells on all channels (including online platforms, offline stores, and group buying and distribution channels) in Laiyifen. “Shanghai Zui Ai Liquor” achieved revenue of 1,3281 million yuan in 2020. It is beginning to take shape, and the future development trend is good.
Based on the traditional core and comprehensive upgrade of the “fresh snacks” brand strategy, the market share is expected to continue to grow.
In order to meet the emerging market demand for healthy diets and nutritional consumption upgrades, come to Yifen with “fresh”
For the core as a support point for brand strategy upgrades, a fresh snack strategy is comprehensively proposed, including a new logo upgrade, new category layout, and refined membership operations. It also released a new “fresh” label design, fresh snack gift boxes, and future concept stores to complete a comprehensive systematic upgrade. “Fresh snacks” are built as a systematic project using the five major standards of fresh raw materials, fresh technology, preservation of fresh packaging, production and marketing, and fresh distribution. Coupled with its huge number of stores and the “Ten Thousand Lights” plan that continues to advance, the multi-wheel drive company's brand strategy upgrade is expected to enable the company to gain greater market share and room for growth.
Investment suggestions: We expect the company to achieve EPS of 0.89, 0.74, and 0.85 yuan in 2021-2023, corresponding to PE 17, 20, and 18, and maintain the “increase in holdings” rating.
Risk warning: Increased competition in the industry, rising raw material prices, food safety issues, brand strategy layout falling short of expectations, new business development falling short of expectations, etc.