Event
The company announces that it will report three quarters in 2023. In the first three quarters of 2023, the company achieved a total income of 20.664 billion yuan (- 3.37%), a net profit of 323 million yuan (- 12.67%) and a non-return net profit of 312 million yuan (+ 10.68%).
23Q3, the company realized a total income of 6.525 billion yuan (- 6.44%), a net profit of-15 million yuan (- 117.36%) and a non-return net profit of-5 million yuan (- 111.66%).
Steady growth of distribution channels
1) Product revenue: in the first three quarters of 2023, the company's income from liquid milk / other dairy products / animal husbandry products / other products was 1.81 billion yuan, respectively, for 56.72 pounds, 5.51 percent, 29.23 percent, 25.55 percent, 23.81 percent, respectively, compared with the same period last year.
2) the growth of Shanghai and overseas areas is steady. In the first three quarters of 2023, the company's Shanghai / non-local / overseas income was 58.19 billion yuan, respectively. Compared with the same period last year, the revenue of the company was 5.119 billion yuan, which was + 0.01%, 6.56%, 2.19%, 23Q3,-3.51%, 10.25%, 6.77%, respectively.
3) the growth of distribution channels is steady. In the first three quarters of 2023, the company's revenue from direct sales / distribution channels was 4.853 billion yuan respectively, compared with 1.73% of the same period last year-11.99%, 0.75% and-20.27%, respectively. At the end of 23Q3, the number of Shanghai / non-local dealers of the company was 466, 3716 respectively, compared with the same period last year, with a year-on-year increase of + 8.37% and a net increase of 113 over the beginning of the year, with a net increase of 20,137 of Q3.
Overseas subsidiary New Wright affects profits in the short term
1) the company's profitability: in the first three quarters of 2023, the company's gross profit margin was 18.67% (+ 0.27pct), and the net return rate was 1.56% (- 0.17pct). The decline in raw milk prices contributed greatly to the increase in gross profit margin. 23Q3, the gross profit margin of the company is 15.52% (- 1.42pct), and the return net profit rate is-0.23% (- 1.50pct). The overseas subsidiary 23Q3 loss has a great impact on the current profit (the overseas subsidiary Xinlaite achieved a net profit of 85 million yuan in the first half of the year).
2) the expense rate has increased compared with the same period last year. In the first three quarters of 2023, the company's sales / management / financial expense rates were 12.42%, 3.23% and 0.79%, respectively, and the sales / management / financial expense rates were 12.42%, 3.23% and 0.29%, respectively, compared with the same period of the same period last year. The sales / management / financial expense rates of the company were + 1.02/-0.45/+0.22pct, respectively.
Leading by Innovation, continuously promoting Digital Transformation
1) leading by innovation, improving quality and increasing efficiency. 23H1, the company has strengthened innovation, successfully developed and listed 30 new products, and three series of bright milk powder have completed the new GB registration and successfully listed on the market. At the same time, the company has joined forces with various departments through the research institute to carry out more than 40 technical support projects and take more measures to improve quality and efficiency.
2) continue to promote digital transformation. 23H1, the company's financial digitization project accelerated, a number of factories and marketing centers completed the system online, to achieve multi-process digital, integrated management; through the upstream and downstream industry chain business of customers and suppliers. The intelligent factory of **** dairy industry chain is listed in the "list of 10 benchmark intelligent factories in Shanghai" announced by Shanghai Economic and Information Commission.
Investment suggestion
The company focuses on dairy products, and the moat in Shanghai and East China is stable. We estimate that the company's homing net profit from 2023 to 2025 will be RMB 452, 649, 741 million respectively, an increase of 25.20%, 43.80% and 14.10%, respectively, corresponding to a market capitalization of RMB 13.9 billion on October 27, when the PE will be 31, 21 and 19X, respectively, maintaining a "buy" rating.
Risk hint
Food safety risk, raw milk price fluctuation risk, policy adjustment risk.