Events:
On October 26, 2023, Yuanzu shares released the third quarterly report of 2023, the company achieved operating income of 2.157 billion yuan in the first three quarters, with + 1.41%; net profit of 302 million yuan, + 1.11% compared with the same period last year; deducting non-return net profit of 279 million yuan, + 3.06% of the same period last year.
Main points of investment:
The revenue in the peak season grew steadily, and the profits in the first three quarters became positive: the company's operating income in the third quarter was 1.084 billion yuan, + 0.33% compared with the same period last year; the net profit returned to its mother was 254 million yuan, + 7.35% compared with the same period last year. With the weak recovery of macro demand this year and the poor overall prosperity of the mooncake industry, we expect the company's mooncake business to achieve steady growth. And as this year's Mid-Autumn Festival is at the end of September, the company is expected to have some mooncake business revenue confirmed in the fourth quarter, the actual growth rate is higher. In 2022, the superimposed policy of deferred payment and tax exemption and rent reduction have contributed to the net profit to a certain extent. this year, this part of the dividend factor no longer exists, the company has actively adjusted, and the performance growth in the third quarter has been steady, reversing the declining trend of profits in the first half of the year. Steady growth is expected for the whole year.
The online growth rate has slowed down, and the gross profit margin has increased significantly: in terms of product revenue, cake revenue in the first three quarters was 762 million yuan, 0.82% over the same period last year, and Chinese and western pastry revenue was 1.295 billion yuan, an increase of 1.54% over the same period last year, maintaining a slight growth trend. In terms of sub-channels, offline income in the first three quarters was 1.13 billion yuan, + 0.44% year-on-year, and 978 million yuan online, + 2.23% year-on-year. The growth rate of online revenue in the third quarter is slower than that in the first half of the year, and we expect that the company has strictly controlled the promotional discounts on online platforms in order to maintain brand image and price system in the third quarter. The company's gross profit margin in the third quarter was 65.23%, an increase of 2.8 percentage points over the same period last year, and its profitability improved significantly. We expect to be mainly due to the high cost of raw materials and the increase in the proportion of self-production. The company's accounts receivable at the end of the third quarter was 320 million yuan, a significant increase over the same period last year. We expect that mainly due to the late Mid-Autumn Festival, some of the accounts will be collected in the fourth quarter.
3. Profit forecast and rating: as the demand recovery this year is slightly lower than we expected, we downgrade our profit forecast. It is estimated that the company's EPS in 2023-2025 will be 1.28pm 1.41x1.57 yuan respectively, and the corresponding PE will be 2023 times that of 15-13-12. Considering that since the company went public in 2020, after the tests of epidemic situation and online transformation, the performance has grown steadily, the cash flow is good and the dividend ratio is high, and the dividend payout rate from 2016 to 2022 is as high as 80.0%, 70.6% and 90.1%, respectively. The valuation has room for repair and the "overweight" rating is maintained.
Risk tips: 1) food safety problems; 2) the opening of stores is not up to expectations, and the increase in the efficiency of individual stores is not obvious; 3) the competition is intensified, and the increased discount on card coupons leads to an increase in the cost rate; 4) the seasonal fluctuation of card voucher gift boxes is still relatively intense, resulting in large fluctuations in market expectations in a short period of time; 5) online growth slows down.
Risk tips: 1) food safety risk; 2) new product promotion is not as expected; 3) the impact of the epidemic is higher than expected; 4) cost rise is higher than expected; 5) channel development is not as expected.