On October 27, 2023, Youyou Food released its report for the first three quarters of 2023.

Main points of investment

Performance is in line with expectations, profits are under short-term pressure

The total revenue of 2023Q1-Q3 is 759 million yuan (up 3%), and the net profit is 106 million yuan (2%), of which the total revenue of 2023Q3 is 279 million yuan (up 11%) and the net profit is 26 million yuan (40%). The performance is in line with expectations, and the profit is under short-term pressure, which is due to the decrease of gross profit margin and the increase of expenses during the period. At the profit end, 2023Q1-Q3 gross margin is 30.62% (+ 1pct), net profit rate is 13.97% (- 0.1pct); 2023Q3 gross profit margin is 26.96% (- 6pct), net profit rate is 9.22% (- 8pct). On the expense side, the 2023Q3 sales expense rate is 13.80% (+ 5pct), the management expense rate is 3.89% (+ 1pct), and the proportion of business tax and surcharge is 0.64% (- 0.1pct). On the cash flow side, the net cash flow of 2023Q1-Q3 operating activities is 39 million yuan (same as minus 82%), and the net cash flow of 2023Q3 operating activities is 79 million yuan (same as minus 40%), which is an increase in cash paid for the purchase of raw materials. As of the end of 2023Q3, the contract liability was 29 million yuan (month-on-month + 40%).

Phoenix feet grow steadily, and the whole country continues to expand.

In terms of products, the revenue of 2023Q3 Chicken Feet with Pickled Peppers / pig skin crystal / bamboo shoots / dried bean curds / peanuts / other products is 2.2max 0.19max, 0.07max 0.04max, RMB 0.13 million, respectively, compared with the same period last year, + 19%, 8%, 11%, 11%, 3%, 29%, 35%, of which Phoenix feet and bamboo shoots are growing steadily. From the perspective of different channels, the online and offline revenue of 2023Q3 is 0.04 million yuan and 272 million yuan respectively, which is 11% compared with the same period last year. From a regional point of view, the revenue of 2023Q3 Southwest / East China / Northwest / North China / South China / Central China / Northeast respectively

1.37Accord 0.19, 0.11, 0.11, 0.11, 0.11, 0.08, 0.06 billion yuan, compared with the same period last year,-5%, 49%, 18%, 22%, 33%, 12%, 67%, and the markets in East, Northwest and Central China continue to expand. By the end of 2023Q3, there were a total of 654 dealers, a net increase of 65.

Profit forecast

We are optimistic that the company will consolidate the basic market of Phoenix claws and continue to create the second growth curve. According to the three quarterly reports, we adjusted the EPS for 2023-2025 to 0.370.45max 0.56 (the previous value is 0.470.59), and the current share price corresponds to PE times 23-19-15, maintaining the "Buy" investment rating.

Risk hint

Macroeconomic downside risks, lower-than-expected promotion of new products, rising risks of raw materials, less-than-expected growth of large items, and so on.