Event: The company published its annual report for 2021 and quarterly report for '22. In '21, we achieved operating income of 4.475 billion yuan, a year-on-year decrease of 0.44%; net profit attributable to shareholders of listed companies - 138.379 million yuan, an increase of 94.85% over the previous year. In Q1 of '22, the company's net profit was 9.46 million yuan, an increase of 110.55% over the previous year; after deducting non-net profit of 8.11 million yuan, an increase of 236.66% over the previous year.
Key points of investment:
The upstream sector affects profits, and the main business supports management improvements. The company's main business was profitable in '21, but farming losses reduced the company's overall profit level. Overseas, the company gradually overcame adverse effects such as high logistics costs and tight warehousing, and the US SSC achieved a net operating profit of 35.84 million yuan. The company accelerated the layout of prepared dishes. In '21, the revenue of prepared dishes reached 841 million yuan, and the overall added value of the business continued to increase. In '21, the company's processing business achieved a gross profit margin of 16.41%, an increase of 4.55 pcts over the previous year. Non-net profit of 8.11 million yuan was deducted in Q1 in '22, an increase of 236.66% over the previous year. Profitability improved markedly.
The advantages of the entire industry chain are prominent, and core competitiveness continues to be consolidated. 1) Procurement: The company has global supply chain advantages and lays out the world's main places of production of raw materials for aquatic products such as prawns. Large-scale procurement increased the company's bargaining power. In '21, the company's top five suppliers accounted for 44.73% of purchases, an increase of 33.68 pcts over the previous year. 2) Production: It is one of only two companies in the country that have obtained BAP four-star certification for prawns and tilapia at the same time, and the product quality is fully traceable. 3) R&D: A number of new products were developed in '21, such as squirrel sea bass fillets, sauerkraut slices, crayfish, tender beef, etc. The added value of the product line drives the continuous increase in overall gross margin. In the second half of '21, the flavored grilled fish series was launched one after another, and it is expected to become a major product. 4) Sales: Breakthrough in the domestic market, significant channel strength. The company achieved revenue of 2,234 million yuan in the domestic market in '21, an increase of 13.46% over the previous year, accelerating revenue generation. Online platforms such as Tmall and JD achieved a 50% year-on-year increase in sales revenue. The number of cities covered by the subsidence in China reached 158, with a coverage rate of 52%.
Focus on the main business again, and it will definitely increase hope to gain strength. Highlight 1. In recent years, the company's upstream farming and other businesses have had a great negative impact on performance. In '22, the company announced that it would divest its upstream aquaculture business. After focusing, the main business will be stronger and more focused, and profits are expected to improve further. Highlight 2. The company launched a 1 billion yuan project to expand the production capacity of prepared vegetables and increase distribution. The global pandemic and changes in consumption habits of the new generation have spawned a huge prepared food market, and the deeply processed food and prepared food industry is expected to usher in rapid growth.
After the company's fund-raising project was upgraded and put into operation, it will add 24,000 tons of prepared fish and shrimp dishes, 15,300 tons of crayfish, and 29,700 tons of deep-processed fish products. The performance is expected to improve.
Investment advice
The company is a marine food enterprise integrating global procurement, deep processing, and food research and development. It is gradually transforming to food ingredients that focus on prepared dishes, and is expected to seize industry opportunities to achieve rapid growth in performance. We expect the company's net profit from 2022-2024 to be 36.35 million yuan, 47.36 million yuan, and 71.42 million yuan, respectively, and EPS of 0.04 yuan, 0.05 yuan, and 0.08 yuan, corresponding to PE 129.50, 100.00, and 66.15 times.
Risk warning: Risks such as unimplemented fixed increases, food safety, changes in raw material prices, and the epidemic.
