Event: on July 5, the company issued a notice on the application for non-public offering of A-shares approved by the Development and Review Commission of China Securities Regulatory Commission, and the China Securities Regulatory Commission examined and approved the company's application for non-public offering of A-shares.
The fixed increase project has been approved and the capacity bottleneck will be broken soon. The company intends to raise 750 million yuan for the food ingredients R & D and manufacturing base project, which will be implemented by the company's wholly-owned subsidiary Shanghai Shenshun Food Co., Ltd. after completion, it will form an annual production capacity of 70,000 tons of chocolate and 50,000 tons of fruit products (jam). The company has nearly 30 years of chocolate production experience in Hangzhou Tianshun, jam products are exported to Zhejiang Biou in Japan, and Shanghai Mengze, the largest importer of high-end fruits in North America, the current production capacity can not meet the increasing market demand is the main factor restricting the development of the company. The company's current industrial chocolate and jam production capacity is about 30,000 tons / year and 120,000 tons / year respectively. After the completion of this project, the production capacity will be greatly improved.
The downstream demand is exuberant, and there is broad room for volume and price improvement. With the business accumulation from 2017 to 2020, the company has significantly improved and improved the sales channels, product matrix, production process, capacity utilization, quality rate, customer stickiness and industry awareness of the industrial chocolate and jam manufacturing business sector. it has become an increasingly prominent performance growth point of the company. The annual contribution income of the food ingredient manufacturing business in 2020 was 430 million yuan, an increase of 189.38 percent over 2018, an increase of 189.38 percent over 2018, accounting for 20.71 percent of the total income and an increase of 11.54 pct over 2018. The company's capacity utilization rate and production and sales rate remain high all the year round, with 97.40% and 88.54% in 2021Q1 industrial chocolate and 85.23% and 95.37% in jam, respectively. With the continuous improvement of the recognition of the company's products by major customers such as Yili, Mengniu, Guangming, Haolilai and Dali, as well as the further development of markets such as frozen drinks, baking, candies and beverages, the future order reserve is sufficient and there is plenty of room for growth. high certainty. Product prices benefited from the end of the price war and the trend of product upgrading, which improved significantly in 2021. The gross profit margins of 2021Q1 chocolate and jam were 17.79% and 17.24% respectively, 6.09 pct and 2.68 pct higher than in 2020.
Investment suggestion: food ingredients are on the rise, the company's layout in the chocolate and jam industry is expected to seize the industry dividend, the fixed increase project is approved smoothly, the increase in production capacity will expand its leading position in the industry, and the certainty of performance growth is high. We predict that the company's EPS will be 0.86,1.22,1.60 yuan per share in 2021-2023, and the current stock price will be 21X, 15x and 11x respectively in 2021-2023, maintaining a "buy" rating.
Risk tips: raw material price fluctuation risk; product price trend is not as expected risk; production expansion project construction is not as expected risk; food safety risk.
