QIANHE(SH:603027) Huafu Securities·2024-02-05 16:00Investment Rating - The report assigns a "Buy" rating to the company with a target price of 19.52 CNY per share, based on a 30x PE for 2024 [94]. Core Insights - The company is expected to benefit from the growth of the zero-additive soy sauce category, with a projected growth rate exceeding 20% over the next two years. This is supported by the company's strong brand recognition and proactive channel policies, which are anticipated to create a positive cycle of sales growth and market expansion [7][33][61]. - The soy sauce market in China has been steadily expanding, with a CAGR of approximately 7% from 2017 to 2022. The industry is entering a phase where value-driven growth is expected to continue, particularly with the rising demand for healthier products [30][41]. - The company has successfully navigated through various phases of growth, focusing on product expansion and channel development, particularly in the zero-additive segment, which has become a key driver of its business [12][37][51]. Summary by Sections 1. Zero-Additive Strategy - The company has established itself as a leader in the zero-additive category, launching its first zero-additive soy sauce in 2007 and continuously expanding its product line and consumer education efforts [51][80]. - The zero-additive soy sauce market is projected to reach approximately 4.4 billion CNY in retail sales by 2023, with an expected annual penetration rate increase of 2% [46]. 2. Market Expansion and Channel Development - The company has been actively expanding its presence in the national market since 2013, focusing on both product quality and channel diversification. This includes significant investments in production capacity and channel partnerships [12][58]. - The company has seen a nearly 75% increase in the number of distributors in external markets from the end of 2021 to the first half of 2023, indicating strong growth in its distribution network [58]. 3. Financial Projections - Revenue growth for soy sauce is expected to be 35.4%, 20.4%, and 18.4% from 2023 to 2025, with corresponding volume growth rates of 35%, 20%, and 18% [32][93]. - The company anticipates improvements in gross margins due to a favorable product mix and declining raw material costs, projecting gross margins of 38.9%, 39.1%, and 39.2% for the same period [63]. 4. Competitive Positioning - The company has a strong competitive edge due to its early entry into the zero-additive market and its established brand reputation. This is expected to enhance its market share as consumer preferences shift towards healthier options [51][80]. - The report highlights the importance of brand strength and channel synergy in driving growth across its product lines, including soy sauce, vinegar, and cooking wine [84].