Essence Securities: Maintaining the "Buy-A" rating of Fuling Juice (002507.SZ) with a target price of 39.36 yuan

Zhitong Finance APP learned that Anxin Securities released a research report saying that maintaining the "buy-A" rating of Fuling Cai Cai (002507.SZ), it is expected that the revenue in 2021-23 will be 24.74/28.07/3.15 billion yuan, an increase of 8.8%/13.5%/12.2% year-on-year, and the net profit will be 6.7/9.19/1.035 billion yuan, year-on-year -13.7%/+37.2%/+12.5%. Slightly adjusted the target price of 39.36 yuan, corresponding to 22 years 38 times PE.

Event: The company disclosed the third quarter report of 2021, and the income/attributable net profit/net profit of non-attributable to the mother in January-September was 19.55/5.04/486 million yuan, +8.73%/-17.92%/-19.22% year-on-year, of which Q3 achieved revenue/attributable net profit/deducted non-attributable net profit of 6.09/1.27/113 million yuan, a year-on-year increase of +1.30%/-39.07%/-45.54%.

Essence Securities' main views are as follows:

Revenue growth remained solid and channel inventories improved

Revenue growth from January to September was generally stable, and Q3 company's revenue increased by 1.30% year-on-year, mainly due to base fluctuations. The relatively high level of Q2 channel inventory has been alleviated, and the Q3 channel inventory is about 1.5 months, which is basically benign, reflecting the real sales growth level. Since the beginning of this year, the overall demand for the mass category has continued to be weak, mainly due to:

1) After the epidemic, the consumption expenditure of a considerable group is cautious, 2) the channels are more diversified and the differentiation is serious, and the pace of the company's group purchase layout in the community is relatively slow, and the effect has not yet been exerted.

3) The company's original products are mainly for families, industrial enterprises and travel scenarios, and the product and channel laying of new scenes such as catering and one-person food is lagging behind, but the company continues to invest in the brand as an industry leader, promotes the rejuvenation of the Wujiang brand, diversifies the product consumption scene, and accelerates the channel expansion and sinking strategy In the right direction, the results will be reflected later.

The sales expenses are greatly increased and the cost of raw materials is high, which leads to the pressure on the net profit margin

Gross margin in the first three quarters was 57.05%, down 0.83pct year-on-year, and the sales/management expense ratio increased by 10.84/0.77pct year-on-year, resulting in a net profit margin of 8.36pct to 25.76% year-on-year. In the third quarter of the single quarter, the company achieved a gross profit margin of 51.64%, down 7.27pct year-on-year, down 7.21pct month-on-month, mainly due to: 1) the impact of accounting standards, freight included in the cost, thereby affecting the gross profit margin, 2) the company's previous collection and storage of high-priced green vegetables began to reflect to the statement, and the comprehensive gross profit continued to be under pressure.

Q3 sales expense ratio of 29.61%, an increase of 13.85pct year-on-year, the company held high, the new brand promotion fee of about 56 million yuan, CCTV, ladder media and Internet public relations, consumer experience and display all-round communication, so that potential consumers to reshape and recognize the brand. Q3 management expense ratio of 3.56%, an increase of 1.50pct year-on-year, of which the salary of employees and the amortization of intangible assets increased significantly. The overall result was a net profit margin of 20.95%, down 13.88pct year-on-year, and the gross profit was under pressure and the superimposed expense was significantly invested, causing the company's profitability to decline.

Cost optimization, channel broadening, there is still room for price action

At the beginning of the year, the company set a strategy of holding high and playing high, leading by "clarifying the value of squeezed vegetables and doing the hot Wujiang brand", which led to a large investment in brand promotion expenses, which led to short-term pressure on profits, and the company will continue to maintain the investment in brand expenses while evaluating the effect and optimizing the delivery; In terms of channels, after the company's "lower county project", it has attached great importance to community group buying and carried out layout cooperation; This year, the use of raw materials prices are higher, the company in the high cost of operation, in the context of rising costs of other popular products such as condiments, etc. have price increase action, the company's past price adjustment frequency is not low, there are also supermarket channel price adjustment actions during the year, the bank expects that the company's main products will also have room for price increases at the end of the year.

Risk Warning: The continuous weakness of mass demand affects the recovery of sales; Channel sinking, new channel development progress is less than expected; Category expansion fell short of expectations.