occurrences
On April 28, 2023, Longda Food released the 2022 Annual Report and the 2023 Quarterly Report.
Key points of investment
Performance turned a loss into a profit, and improvements are expected to accelerate
Revenue in 2022 was 16.116 billion yuan (down 17.39% from the same period), and net profit of the mother was 75 million yuan (same increase of 111.45%). Operating performance turned a loss into a profit. The total revenue of 2022Q4 was 4.664 billion yuan (same increase of 17.13%), and net profit of the mother was 026 million yuan (same increase of 102.64%). The total revenue of 2023Q1 was 3.477 billion yuan (up 4.09% from the same period), and the net profit of the mother was 21 million yuan (down 9.56% from the same period). 2022/2022Q4/2023Q1 gross margin was 4.03%/4.36%/4.67%, year on year +2/+16/+1pct, sales expense ratio was 1.07%/0.81%/1.22%, year on year -0.2/-0.7/-0.3pct, management expense ratio was 1.65%/1.57%/1.87% year on year +0.2/-0.7/+0.03pct, net interest rate was 0.62%/0.12%/1.06% year on year, +5/+30/-0.3pct year on year.
Net cash flow from operating activities in 2022/2022 Q4/2023Q1 was 991/0.46/ -83 million yuan respectively, +1173%/+167%/-114%, respectively.
Continued efforts to prepare dishes, B-side is expected to recover
By product, in 2022, fresh frozen meat/cooked food/prepared dishes/imported trade/other revenue was 120.31/3.37/13.14/16.1/824 million yuan, +11%/-6%/+11%/-57%/+94%, accounting for 75%/2%/8%/10%/5%, of which the gross margin for fresh frozen meat/prepared vegetables was 2%/10%, compared to +0.3/+1pct over the same period last year. The company continues to promote the development of prepared dishes, create large products in the 100 million yuan and 10 million yuan levels, and achieve steady growth and increased profitability of prepared dishes. A total of 185 new products were developed in 2022. Currently, the fat sausage series, crispy meat series, and bacon series have achieved revenue of hundreds of millions; the sausage series and the meatball series are expected to break 100 million in the future. In 2023, products such as the multi-flavor low-fat chicken breast sausage series, low-fat beef patties, low temperature lunch meat, and instant steak will be developed. By channel, distribution/direct sales revenue in 2022 was 127.46/337 billion yuan, or -14%/-29% year on year, accounting for 79%/21%. The company strengthened cooperation with major customers and promoted good sales growth for major customers through Guolao Kaixin. In 2023, it will promote group meals, supply chain customers, and regional restaurant chain customers. More than 500 new dealers specializing in prepared dishes were expanded throughout the year, and core dealers were gradually cultivated. By the end of 2022, the company had 8,955 dealers, an increase of 105 over the beginning of the year. Looking at the subregions, in 2022, within Shandong Province/Other Regions of East China/Central China/North China/South China/Northeast Region/Southwest Region/Northwest China and others, revenue was 59.72/54.4/21.56/7.284/6.9/7.32/103 billion yuan, -12%/-24%/-8%/-22%/-22%/-49%/-9%/-23%/-22%, accounting for 37%/34%/13%/5%/0.6%. Construction of new projects in Guanyun, Bazhong, and Hainan has begun one after another, which is expected to improve the national layout. Looking at volume and price breakdown, pig slaughter and meat processing sold 687,600 tons in 2022 (-1.97%), and the corresponding tonne price was 19,900 yuan/ton (+5.27%).
Profit forecasting
The 2023-2025 EPS is expected to be 0.24/0.41/0.70 yuan respectively, and the current stock price corresponding to PE is 36/20/12 times respectively, maintaining the “buy” investment rating.
Risk warning
Macroeconomic downturn risks, risk of fluctuations in pig prices, progress in prepared vegetables falling short of expectations, recovery in pig production capacity falling short of expectations, etc.