Short-term performance is under pressure to maintain the “increase in holdings” rating
The company achieved total revenue of 445 million yuan in 2022, a year-on-year decrease of 12.12%; net profit returned to the mother was 49 million yuan, an increase of 14.41% over the previous year. 2023Q1 achieved revenue of 120 million yuan, a year-on-year decrease of 12.58%; net profit returned to the mother was 21 million yuan, a year-on-year decrease of 5.77%. Due to pressure on the branded meat business, we lowered our profit forecast for 2023-2024 and added a profit forecast for 2025. The estimated net profit for 2023-2025 is 0.58 (-0.48), 0.71 (-0.63), and 0.78 billion yuan respectively. EPS is 0.06 (-0.05), 0.07 (-0.07), 0.08 yuan. The current stock price corresponds to PE 75.4, 61.6, 55.7 times. With the perfect channel layout and diversification of consumption scenarios, the company is still in a period of rapid development, maintaining its “increase in holdings” rating.
The decline in revenue was mainly due to pressure on the branded meat business, and specialty meat products continued to grow (1) by product: in 2022, ham revenue fell 4.44% year on year to 175 million yuan; demand for specialty meat products was strong during the pandemic, up 79.14% year on year to 176 million yuan; branded meat was affected by falling pork prices, which fell 69.76% year on year to 54 million yuan. (2) Looking at each channel: the company's KA distribution channels have been growing steadily, with a year-on-year increase of 77.93% in 2022; hotel catering, food processing, direct management (group purchases), and online channels have all declined. 2023Q1 revenue fell 12.58% year on year, mainly due to the early advance of the Spring Festival and the blockage of delivery due to the ongoing impact of the epidemic. By product, branded meat declined year over year, and specialty meat products and ham were relatively stable. Looking ahead to 2023, brand meat is still under pressure, but the company's revenue can still grow: (1) increase the promotion of ham and specialty meat products; (2) ham launches low-end products to explore farmers' markets, which is expected to provide additional volume; (3) Lay out the prepared dish business, and many prepared ham dishes have already entered the pilot stage (such as honey sauce recipe, ham duck stew, and honeysuckle stew).
The increase in net interest rate was mainly due to an increase in gross margin
The net interest rate of 2023Q1 company increased by 1.3 pct to 17.3%, mainly due to an increase in gross margin. The gross margin of 2023Q1 increased by 3.3 pct to 30.1%, mainly due to the weakening of the negative impact of the loss-making brand meat business. Looking ahead to 2023, branded meat still needs to reduce inventory, the negative impact on gross margin will be reduced, and overall gross margin is expected to improve; rates are expected to flatten slightly as scale effects become apparent.
Risk warning: risk of macroeconomic fluctuations, market expansion falling short of expectations, risk of fluctuations in raw material prices, etc.