涪陵榨菜（002507）：2025年第一季度运营平淡，并购将支持外部扩张

TepidOperationsin 1Q25, M&AtoSupport External Expansion Huatai Research Quarterly Results Review 15 May 2025│China (Mainland) Food AnalystGONG YuanyueSAC No. S0570520100001SFC No. BQL737gongyuanyue@htsc.com+(86) 212897 2228 FulingZhacai’s1Q25revenue/attributablenetprofit(NP)/recurringNPwereRMB710/270/260mn(-4.8/+0.2/-0.6%yoy), below our expectations (ourpreview:revenue/attributable NP-2/+10%yoy).Channel inventory has remained lowsince2024and continued at a healthy level in 1Q25. As household stockpiling declinedpost-pandemic, 1Q25revenue fellyoyduring the off-season. We expect sales topick upduringthe 2Q25-3Q25 peak season.For profits, the use of low-costmustard lifted the GPM/attributable NPM by 3.8/1.9pp yoy in 1Q25.Despitecontinued spendinginlocalmarketing under abrand-sales integration strategy,expense ratios remained under control. Looking to 2025, we expect operations toimprove gradually in line withamacro recovery, mergers and acquisitions (M&A) tounlock external growth opportunities,andmustard prices to stay low,thusenablingprofitability to continue improving. Maintain BUY. AnalystNI XinyuSAC No. S0570523080004SFC No. BVQ058nixinyu@htsc.com+(86) 21 2897 2228 Key data 1Q25revenue declined, significant cost benefitsFor1Q25,revenue declinedby4.8% yoy, primarily due to stable operations with low inventory during the off-season. The company targets 8% revenue growth for2025, with organic growth drivers including: 1) recovery in zhacai sales volumeandpricesdrivenby 2024 price/channel/competition strategies, coupledwithcontinuedinvestmentingroundmarketingunderthebrand-salesintegrationapproach; 2) ramped-up efforts in distributing radish and cowpea products since2H24; 3) ongoing expansion in catering channels contributing incremental growth.On the profit side,the1Q25 GPM roseby3.8pp yoy to 56.0%, mainly due to lowermustard-procurementprices.Thesales/administrative/financialexpenseratioschanged by +0.7pp/flat/+1.3pp yoy, a modest increase under thebrand-salesintegration strategy.The attributable NPM picked upby1.9pp yoy to 38.2%.For2025, consistently low procurement prices for new-season mustard, as well aspotentially sustained input aimed atpushing up market share and revenue,arelikelytodrive continued profit growth on the back of scale expansion, in our view. Source:Wind Proposed M&A to unlock channel/product synergiesFuling Zhacaihasannounced a plan to acquire a 51% stake in Weizhimeithroughshare issuanceandcashpayment.Weizhimeifocuses oncustomizedR&D,flexible production, and sales services of Sichuan-flavor compound seasonings(including hotpot bases and Chinese dish seasonings) and pre-cooked meals.According to Weizhimei’swebsite, the company serves over 10,000 catering endcustomers, including regional chainssuch asSanguo Lianmeng and Yulian.Basedon acompany announcement, Weizhimei’srevenueswereRMB280/270mn andNPwereRMB40.71/39.62mn in 2023/2024, translatingintoNPMsof 14.3/14.9%.IthadtwomodernproductionbasesandtotalassetsofRMB200mnasofend-2024. WhileWeizhimeiprimarilyfocuses onToBsales ofSichuan-flavorcompound seasonings, Fuling Zhacai focuses onToC sales ofzhacai.We expecthetwobusinessestoformsynergyinchannelcollaborationandproductexpansion. Positive onbothorganic andexternalgrowthefforts;eiterate BUYAsFuling Zhacaihas completed internaladjustmentsinorganization, product, and sales strategy, and external M&A is progressing steadily, weareoptimistic on itsfuturedevelopment.Wemaintainourearningsforecastsandexpect2025/2026/2027EPS of RMB0.75/0.82/0.89. We value the stock at 22x 2025E PE,atparwithitspeers’averageonWindconsensus,forourtargetpriceofRMB16.50. BUY. Risks: volatile raw-material prices; macroeconomic performance weaker than weexpect; intensified industry competition. Source:Wind, Huatai Research Source:Wind, Huatai Research Full financials Disclaimers Analyst CertificationI/We, GONG Yuanyue, NI Xinyu, hereby certify that the views expressed in this report accurately reflect the personal views of theanalyst(s) about the subject securities or issuers; and no part of the compensation of the analyst(s) was, is, or will be, directly orindirectly, related to the inclusion of specific recommendations or views in this report. General Disclaimers and DisclosuresThis research report has been prepared by Huatai Financial Holdings (Hong Kong) Limited (hereinafter referred to as “HFHL”).The information herein is strictly confidential to the recipient. This report is intended for HFHL, its clients and associatedcompanies. Any other person shall not be deemed a client of the Company merely from his or her receipt of this report. This report is based on information deemed reliable and publicly available by HFHL, but HFHL and its associated company(ies)(collectively, hereinafter“Huatai”)makes no guarantee as to the accuracy or completeness of such information. The opinions, assessments and projections contained herein only reflect the views and judgments at the issuance date. Huataimay i