Event: on August 18, 2023, the company disclosed its semi-annual report of 2023, in which 2023H1 achieved a revenue of 701 million yuan (YOY10.88%) and a net profit of 65.34 million yuan (YOY41.18%).

Among them, 23Q2 achieved revenue of 314 million yuan (YOY11.19%) and net profit of 26.06 million yuan (YOY44.58%).

Steady growth in income and rapid increase in profits. From the perspective of 23H1, the company comprehensively promotes collaborative innovation in product channels, continuously optimizes product structure, resolves the pressure of rising costs and the contradiction between production, supply and marketing, seeks steady progress to improve business performance, and achieves a 10.88% year-on-year increase in revenue, but a year-on-year decline in gross profit margin (0.44pct). As a result, gross profit increased by 9.74%. On the expense side, the period expense rate decreased 4.77pct compared with the same period last year, in which the sales expense rate decreased 4.00pct year-on-year, the management expense rate decreased 0.44pct year-on-year, and the R & D expense rate increased 0.09pct (mainly due to increased R & D investment), so the homing net profit margin increased 2.00pct compared with the same period last year, corresponding to the final homing net profit of 65.34 million yuan (YOY41.18%).

23Q2 alone, revenue gross profit end, the company's revenue increased 11.19% year-on-year, gross profit margin increased by 1.93pct, so gross profit increased 0.16% year-on-year. In addition, during the period, the expense rate decreased 3.91pct compared with the same period last year (mainly due to the decline in sales expense rate 3.53pct), so the net profit margin of homing increased by 1.92pct compared with the same period last year, corresponding to the final net profit of 26.06 million yuan (YOY44.58%).

To consolidate the advantages of Chunyan, new products such as oat + have become a new engine for growth. In the first half of 2023, the company gave full play to the advantages of the whole industry chain, made continuous breakthroughs in category innovation, continued to consolidate Chunyan's advantages and optimize the existing product structure, and actively promoted a series of new products such as organic big oats and oats +, in order to meet the diversified consumer needs of consumers and continue to show the competitive advantage of core differentiation of the company's products.

In terms of specific products, (1) 2023H1 pure oatmeal series maintained its original advantages (including green oatmeal series and organic oatmeal series) with revenue of 306 million yuan (YOY0.25%) and gross profit margin decreased by 1.88pct compared with the same period last year. (2) the composite oatmeal series benefited from the rapid growth of oatmeal plus series (mainly including Western Australian Sunshine Milk Oatmeal Series, balanced Nourishing Oatmeal Series, Middle-aged nutritious Oatmeal Series, Oat + Oatmeal Series, cereal Series, etc.), achieving a revenue of 332 million yuan (YOY17.16%) and a year-on-year increase in gross profit margin (1.76pct). (3) the total revenue of other + other businesses is 63.66 million yuan (YOY43.89%). We believe that the basic plate of the company's Chunyan series products is stable, while oat + series products drive the rapid growth of composite oatmeal, and we are optimistic that the follow-up company will maintain steady growth.

Continue to promote collaborative innovation of product channels and actively explore a new retail model of online and offline integration. (1) continuous deep ploughing of offline channels and further sinking of dominant areas.

We will actively expand the penetration of key cities in the retail format, focusing on creating "millions of counties and thousands of provinces and regions", and the business will infiltrate into large and medium-sized chain stores, community township convenience stores, wholesale markets and other channels. establish a three-dimensional and comprehensive marketing network system. (2) attach great importance to the management and operation of online channels and create a product matrix in line with the characteristics of online channels and consumption habits. The company ensures the steady growth of sales through fine operation of B2C platforms such as JD.com and Pinduoduo and B2B platforms such as Beijing-Tokyo Xitong and BABA Retail. In addition, we have increased investment in new channels such as live e-commerce and content e-commerce, and established a cooperation mechanism with online celebrities and celebrities to embrace channel changes. (3) the company actively builds new retail channels and effectively promotes the implementation of channel innovation strategy by taking advantage of channel development opportunities such as snack stores, community group buying, community convenience and fresh supermarkets, and achieves a 255% year-on-year increase in channel sales of H1 snack stores in 2023.

Profit forecast and investment advice. We estimate that from 2023 to 2025, the operating income of the company will be 1.507 million yuan, and the net profit will be 1.74 billion yuan, and the corresponding EPS will be 0.63 yuan, 0.78 yuan, 0.93 yuan per share. Combined with the comparable company valuation, the company is given a PE valuation of 25-30 times in 2023, with a reasonable value range of 15.75-18.90 yuan per share, and continue to be given a "better than the market" rating.

Risk hint. (1) the risk of food safety, (2) the intensification of market competition, (3) the expansion of new products and new channels is not as expected.