Incident: The company released its annual report for '22. The company's total revenue for the year '22 was 3,075 billion yuan (yoy -1.76%), net profit of 32 million yuan (yoy -27.67%); the total operating income of the company in Q4 alone was 1,117 million yuan (yoy +202.25%), and net profit of Guimo -19 million yuan (same period last year was 0.3 billion yuan).
The marketing network continues to be built, and major customers are expected to recover faster. Looking at each channel, the company's distribution/big customer/direct management model revenue in '22 was +43.56%/-31.10%/-11.35%, respectively. The decline in channel revenue for major customers was mainly due to weak food and beverage consumption during the pandemic. As food demand gradually recovered, the company continued to work around key customers, mainly large-scale chains and well-known catering companies such as JD's own brands, Sam, Haidilao, Hehegu, and Zhengxin Chicken Chop. The company's big customer channel is expected to recover at an accelerated pace. By region, revenue in Shandong Province/North China/East China/Northeast China/Northeast China/Northwest China in '22 was -7.08%/-51.55%/+49.28%/+111.67%/+31.71%, respectively. The growth rate in Northeast China, East China, and Northwest China was faster. The number of company dealers increased by 211 for the full year of '22, including a net increase of 14/65/37/71/9/15 in Shandong/Northeast China/North China/East China/other regions. The number of dealers in Northeast China, North China and Northwest China increased a lot. Looking ahead to 23 years, the company will continue to develop empty channels and outlets, insist on Shandong, Shaanxi, Beijing, Jilin, East China, South China, and Southwest China as core regions for market construction, and give full play to the location advantages of Delice's various production bases.
There has been a steady increase in prepared dishes, and production capacity bottlenecks have gradually been released. By product, in '22, the company's revenue for chilled meat and frozen meat/prepared dishes/low temperature meat products/beef trade/electric steam/packaging was 15.99/6.43/2.82/3.56/0.99/20 billion yuan respectively, compared with -8.47%/+37.91%/-16.74%/-9.14%/+21.46%/-24.30%, respectively. The growth potential for prepared dishes is strong, mainly due to the continuous enrichment of the company's product matrix, simultaneous expansion of multiple channels, and continuous sales of prepared vegetable products. The company's fund-raising project is providing raw material guarantees for the prepared vegetable business. Up to now, the company's Shandong headquarters has 100,000 tons of prepared vegetable production capacity, 30,000 tons of beef series prepared vegetables, and 20,000 tons of frozen rice and noodles; the production capacity of 50,000 tons of prepared vegetables at the Shaanxi base is expected to be put into operation in 2023Q3, at which time the company's total prepared vegetable production capacity will reach 200,000 tons.
Gross margin is under pressure, and period expenses have increased. The company's gross profit margin in '22 was 6.92% (yoy-0.86pct), mainly due to fluctuations in raw material prices and an increase in the number of production personnel. The cost rate for the period was 6.09% (yoy+0.57 pct), of which the sales expenses rate was 2.98% (yoy+0.10 pct); the management expenses rate was 2.67% (yoy+0.78 pct), mainly due to personnel and remuneration restructuring adjustments and increased investment profits; and the financial expense ratio was 0.10% (-0.38pct), mainly due to the increase in the income from fund-raising cash management. The net profit margin is 1.03% (yoy-0.37 pct). We expect the company's profit to increase as the product structure is optimized and production capacity pressure is gradually released.
Investment advice: We expect the company's revenue for 2023-2025 to be 41.54/5194/6.565 billion yuan respectively, up 35.1%/25.0%/26.4% year on year, and net profit of the mother was 0.91/1.35/207 million yuan respectively, up 186.1%/48.8%/53.5% year on year. The current stock price corresponding to PE (April 20) is 47/32/21X, respectively. The company's new strategic results based on slaughter, power low-temperature meat products, and extended prepared dishes will gradually show results, and the company will gradually show results, and be upgraded to the “recommended” rating .
Risk warning: large fluctuations in pork prices, channel expansion falling short of expectations, production capacity falling short of expectations, etc.