Tianfeng Securities: Give Angel Yeast a buy rating

2021-10-25Liu Chang and Wu Wende of Tianfeng Securities Co., Ltd. conducted a study on Angel Yeast and released a research report "Steady Growth in Revenue, Price Increase hedging cost pressure, Dividends are expected to be released", this report gives a buy rating to Angel Yeast, and the current stock price is 49.61 yuan.

Angel yeast (600298)

Event: The company achieved revenue of 7.594 billion yuan in the first three quarters of 2021, +18.17% year-on-year, and achieved a net profit attributable to the mother of 1.018 billion yuan, +0.54% year-on-year. Among them, Q3 achieved revenue of 2.360 billion yuan, +13.22% year-on-year, and net profit attributable to the mother of 190 million yuan, a year-on-year -35.23%.

Operating income has grown steadily, and the price contribution is expected to gradually appear in the fourth quarter. The company's 21Q3 revenue of 2.360 billion yuan, +13.22% year-on-year, the growth rate slowed down from the second quarter, mainly due to the repeated impact of the epidemic, the recovery of catering is relatively slow, but the overall stability is still strong. Among them, the yeast and deep processing business achieved revenue of 5.958 billion yuan in the first three quarters, +17.76% year-on-year. Second, affected by the sharp rise in maritime costs, it is speculated that the export business has slowed down, and the foreign business in the first three quarters achieved revenue of 2.070 billion yuan, +10.81% year-on-year, which is slower than the year-on-year growth rate of 12.67% in the first half of the year. Looking forward to the fourth quarter, the company's revenue is expected to maintain steady growth, especially after the price increase, and the stability of revenue is expected to strengthen. In the fourth quarter, in response to the rise in the cost of molasses and other costs, the company raised prices for some products to hedge the pressure brought by costs, and we expect that the price increase dividend is expected to gradually appear in the fourth quarter and next year.

Cost pressure is larger, and the company's profitability is under pressure. The company achieved a net profit attributable to the mother of 190 million yuan in 21Q3, a year-on-year -35.23%, and a net profit margin attributable to the mother in the third quarter of the year-on-year - 6.03pcts to 8.06%. On the one hand, the decline in profitability is due to the sharp increase in the cost of molasses and other costs, and the pressure on the product structure; on the other hand, it is related to the accrual of expenses such as incentives. In terms of gross profit margin, the company achieved a gross profit margin of 24.58% in Q3 2021, a year-on-year increase of -14.72pcts, mainly due to the increase in raw material costs and the adjustment of sales-related freight rates to the cost of main business in the new accounting standards. In terms of expenses, the company's sales expense ratio/ management expense ratio / R&D expense ratio / financial expense ratio changed by -6.03pcts/+1.29pcts/-0.05pcts/-1.17pcts to 5.99%/4.47%/5.15%/0.53% respectively year-on-year, of which the sales expense ratio decreased significantly, mainly due to the adjustment of accounting standards, and the increase in management expense ratio was mainly due to the increase in incentive expenses. In terms of cash flow, the net cash flow from operating activities in the first three quarters was -72.49% year-on-year to 420 million yuan, mainly due to the increase in cash for the purchase of goods and the acceptance of payment for services. In the future, with the landing of the company's price increase, the cost impact is expected to be hedged, considering the cyclical fluctuations of molasses and other costs, it is necessary to closely observe the performance of cost changes on the price increase dividend.

The domestic product structure continues to improve, overseas market advantages continue to accumulate, the company's development can be high on the front line. At present, the company's strong domestic yeast industry barriers have built the basic disk of the company's performance, and with the advantages of funds and yeast industry chain, it is gradually cultivating new performance drivers. On the one hand, the company has accumulated advantages in overseas markets through the epidemic, strengthened the construction of overseas sales teams, and achieved overseas revenue growth with production capacity investment. On the other hand, the domestic yeast business is expected to raise ton prices through price increases and structural improvements due to oligopolistic status. At the same time, the company revised the fixed increase plan, and the increase in production capacity is expected to further strengthen the company's competitiveness and accelerate the layout of production capacity. Through the multi-point layout of domestic and foreign markets, the company's development is expected to enter a new stage. With the gradual construction of the company's related production capacity, the price increase dividend has gradually emerged, and the company's performance is expected to maintain steady growth. In addition, the company also announced that it will build a molasses storage tank, with the construction of the company's molasses energy storage, the company is expected to smooth the cost fluctuations of molasses in the future and further strengthen the stability of the company's performance.

Investment proposal: According to the company's third quarterly report and future outlook, namely price increase landing, fixed increase in production, and molasses energy storage construction, we will adjust the company's revenue from 103.80/116.41/13.115 billion yuan to 10.376/119.91/14.156 billion yuan, a year-on-year increase of +16.15%/+15.57%/+18.05%, and the net profit attributable to the mother from 15.80/18.27/2123 million yuan to 14.01/ 16.66/2.072 billion yuan, +2.15%/+18.90%/+24.41% year-on-year, EPS was 1.68/2.00/2.49 yuan, respectively, maintaining the company's "buy" rating.

Risk warning: C-end sales slowed down, overseas market expansion slowly, food safety risks, etc.

A total of 10 institutions have given ratings in the last 90 days, with 7 buy ratings and 3 overweight ratings; the average target price of institutions in the past 90 days is 66.49; the Securities Star Valuation Analysis Tool shows that Angel Yeast (600298) good company rating is 4.5 stars, good price rating is 3 stars, and valuation comprehensive rating is 4 stars.