Key points of investment:
The company announced the 2023 semi-annual report, and the performance was in line with expectations. The company achieved revenue of 668 million yuan in the first half of the year, an increase of 104% over the previous year, recovered to 88% of H1 in '19, and achieved net profit of 27.92 million yuan (performance forecast 260-28.5 million yuan), an increase of 118% over the previous year, and recovered to 86.5% of H1 in '19. In the second quarter, operating income was 348 million yuan, which recovered to 97% of 19Q2 revenue. 23Q2 achieved net profit of 18.74 million yuan, recovered to 86.6% of 19Q2 revenue, achieved non-net profit of 16.53 million yuan after deducting non-net profit of 16.53 million yuan, and recovered to 102% of 19Q2.
The catering industry has ushered in a recovery. The number of travelers on holidays such as the Spring Festival and May 1st has recovered, and summer tourism continues to heat up. Terminal consumption in the catering market was significantly released in 2023, travel during the Spring Festival and May Day holidays was very popular, and the serviced catering business quickly recovered. From January to June 2023, the country's food and beverage revenue was 2,432.9 billion yuan, an increase of 21.4% over the previous year. With the resumption of offline catering, the company's restaurants have recovered and the performance has been impressive. The number of visitors to Beijing during the summer season in the third quarter was high, and the company's performance is expected to pick up further.
The company is actively adjusting the food structure, opening up new consumer circles, and upgrading stores to create new opportunities. The company strengthened product development and actively adjusted the menu structure. Sales of innovative dishes accounted for 16.5% of the sales amount of dishes other than dine-in specialty dishes in stores. The company's Heping Store “China's Top Sky Courtyard” achieved cumulative revenue of 42% of the store's revenue in the first six months, while the Qianmendian Central Food Service Project achieved revenue of 20% of the store's revenue in the first half of the year. The Wangfujing store “Gong Xi Longfeng Chengxiang” achieved revenue in the first half of the year accounting for 52% of the total store's revenue. During the Spring Festival Golden Week, the Gong Xi project received nearly 10,000 visitors, driving the Wangfujing store to sell more than 800,000 yuan for three consecutive days, and achieve sales of 1.11 million yuan in a single day during the May 1st period.
The company leverages the advantages of time-honored brands, continuously optimizes the food bar product matrix, and achieved new breakthroughs in e-commerce channels. The company uses the catering and food linkage mechanism, promotes the creation of various prepared food brand projects, and forms a diverse brand matrix. The company completed the sorting of products such as regular gift boxes, vacuum roast duck, cake, sauce, pasta, cooked food, etc., and promoted the iterative upgrade of New Year's Eve dinner, achieving a 33% year-on-year increase in sales. The company continues to create popular products from celebrities such as Quanjude's new duck sauce and Fengzeyuan Sauce-flavored elbow. During the 618 e-commerce shopping festival, e-commerce omni-channel sales increased 200% year-on-year. The 3.0 version of hand-sliced roast duck has been marketed and is gradually entering mass production. Currently, it has sold 16,000 boxes of products in various bags.
Investment analysis: Looking ahead to the peak tourist season in the third and fourth quarter, the company's performance in the second half of the year is expected to continue to improve, and the structural adjustments of the company's dishes and stores are beginning to bear fruit. It is expected that the advantages of long-established brands will continue to be exploited to achieve collaborative development of catering, food, and group meals.
We maintain our profit forecast. We expect to achieve net profit of 0.75/145/179 million yuan in 23-25, corresponding to 54/28/22 times PE in 23-25, maintaining the “buy” rating.
Risk warning: food safety risks, increased competition in the prepared food industry, shortage of senior technical management personnel, etc.