Description of the event
The company released its semi-annual report for 2023. 2023H1 achieved operating income of 1,332 million yuan, -6.95% year-on-year, and realized net profit of 269 million yuan, or -3.02% year-on-year. Among them, 2023Q2 achieved operating income of 734 million yuan, -4.08% year-on-year, and realized net profit of 172 million yuan, +11.87% year-on-year.
Incident comments
The operation is relatively steady, and the overseas share remains above 90%. With the gradual recovery of the domestic restaurant industry and the company's development in the domestic chain market, domestic sales revenue has increased to a certain extent. Meanwhile, the foreign sales market company lowered the sales prices of overseas subsidiaries in response to the “reduction in shipping freight rates,” resulting in a corresponding decrease in the amount of export revenue. Overall, the share of the company's domestic and foreign sales revenue has changed. Currently, the company's export sales revenue accounts for about 91%.
Q2 Net profit was adjusted year over year, and profitability increased. Looking at Q2 alone, the company's net profit to parent increased 11.87% year-on-year. Under pressure on revenue, profit increased slightly. In terms of profitability, 23H1's gross sales margin was 40.72%, up 2.27pct year on year; net sales margin was 20.20%, up 0.82 pct year on year. 2023Q2's gross sales margin was 41.22%, up 5.61 pct year on year, up 1.13 pct; net sales margin was 23.38%, up 3.33 pct year on year, and 7.08 pct month on month. As shipping costs and raw material prices fall, the company's profitability continues to increase.
We continue to be deeply involved in overseas markets, and global development continues to advance. Through years of market development and layout, the company's products have been exported to more than 80 countries and regions around the world, and has established independent brand sales subsidiaries in the United States, the United Kingdom, Germany, France, Italy, Australia, Canada and other countries. The company's sales at overseas subsidiaries use a “warehouse+fast delivery” model to provide customers with a quick and convenient purchasing experience. Up to now, the company has set up 20 overseas warehousing centers.
At present, US subsidiaries have basically completed the deployment of various major purchasing groups in the US industry, and European subsidiaries are also gradually entering well-known local purchasing groups, laying a complete sales channel network for continuing to promote various series of products under their own brands in the future.
Innovate independently and expand new categories of intelligence. The company insists on using independent development methods to continuously expand product categories; it also combines existing product production technology and R&D teams to find technological innovation, integrate concepts such as environmental protection, intelligent manufacturing, and replacement labor into product development, and continues to develop high-margin products for the company that meet customer needs. The company's newly developed “smart french fries robot” product won the 2023 Kitchen Technology Innovation Award from the American Restaurant Association Exhibition. The winning product was exhibited at the official booth of the American Restaurant Association Exhibition held in Chicago in May 2023.
Global market expansion+overseas production capacity help the company grow steadily. In terms of overseas marketing network enhancement projects, the company continues to implement construction projects for overseas warehouses in the UK and promotes warehouse site selection and construction work in France. Meanwhile, the second phase of the Thai production base project is under steady construction. The relevant Western kitchen equipment production workshop is expected to be put into production from the end of 2023 to the beginning of 2024. In addition, the company is already preparing to build a parts production workshop in Thailand to meet the parts requirements of the company's production base products in Thailand. Compared with major overseas catering equipment companies such as Middleby and Japan's Hoshizaki, the company still has a lot of room. Based on domestic and foreign channel construction, production capacity layout, and new product development, etc., the company's overseas markets are expected to go hand in hand, opening up a large space.
Maintain a “buy” rating. We expect the company to achieve net profit of 550 to 650 million yuan from 2023-2024, corresponding to 20 to 17 times PE, and maintain a “buy” rating.
Risk warning
1. The risk that European and American demand falls short of expectations;
2. The risk that new product breakthroughs fall short of expectations.