On October 15, 2023, Lotus Health released its quarterly report for the first three quarters of 2023.
Main points of investment
The results in the third quarter exceeded expectations. Gross profit margin and net profit margin increased the company's 2023Q1-Q3 revenue by 1.614 billion yuan, or 23%, quarter by quarter, while the mother's net profit increased by 94% to 95 million yuan. The performance exceeded expectations, the main business of monosodium glutamate and chicken essence, such as steady development, profitability continued to improve. In the first three quarters, the company's gross profit margin was 16.8% (same as increase of 3.5pct), sales expense rate was 4.74% (same as increase of 0.8pct), management expense rate was 2.94% (same as minus 0.2pct), and net profit rate was raised to 6% with increase of 2pct.
Of this total, 2023Q3's revenue was 641 million yuan, an increase of 41%, while the net profit returned to its mother was 44 million yuan, an increase of 163%. Third quarter gross margin 17.4% (same increase 3.2pct), net margin 7% (same increase 3.1pct), sales expense rate 4.7% (same increase 0.2pct), management expense rate 2.9% (same minus 0.2pct), operating tax and additional share 0.49% (same as minus 0.2pct).
The main business is basically stable and meets the high growth online.
In terms of products, the revenue of 2023Q1-Q3 monosodium glutamate, chicken essence, cooking wine, flour and flour products / organic fertilizer and water-soluble fertilizer / other products is 12.2x0.04x0.2max respectively, which is + 26%, 31%, 20%, 20%, 48%, 8%, 75% respectively. Mineral water is a new business, with revenue of 55 million yuan in the first three quarters.
According to the breakdown, the revenue of 2023Q3, monosodium glutamate, chicken essence, cooking wine, flour and flour products / organic fertilizer and water-soluble fertilizer / other products is 4.87x74x0.04x0.01qqqq0.05 million, respectively, compared with the same period last year, which is + 43% gamma, 42%, 50%, 27%, 4%, 67% respectively. Revenue from mineral water in the third quarter was 37 million yuan. From the perspective of different channels, the online and offline revenue of 2023Q1-Q3 is RMB 0.43 billion, an increase of 282% and 21% respectively. Of this total, 2023Q3's online / offline revenue was 616 million yuan respectively, an increase of 525% and 37% respectively. Online to meet the high growth, the trend continues. From a regional point of view, the revenue of 2023Q1-Q3 in North China / East China / South China / West China / Central China / foreign regions is RMB 1.15, 2.52, 2.46, and 2.45, respectively, with an increase of 24%, 35, 10, 15, 25, 31, respectively. In the third quarter, revenue from North China / East China / South China / West China / Central China / foreign regions was 0.48 million yuan respectively, with an increase of 37%, 97%, 33%, 17%, 40% and 32% respectively. By the end of the first three quarters, the company had a total of 2713 dealers, a net increase of 212.
Profit forecast
We are optimistic that since the major shareholders joined the company, they will continue to carry out internal reforms, solve the historical burden, travel light, and actively open up the second growth curve. It is estimated that the EPS for 2023-2025 will be 0.07 + 0.12 + 0.19 yuan, and the current share price will be 112-65-42 times higher than that of PE, maintaining the "buy" investment rating.
Risk hint
Macroeconomic downside risks, food safety risks, lower-than-expected growth of the main business, risk of rising costs.