The company released its three-quarter report for 2023, with 23Q1-3 revenue of 20.664 billion yuan, -3.37%; net profit of 323 million yuan, -12.67%; net profit of 323 million yuan, minus net profit of 312 million yuan, +10.68% year-on-year. 23Q3 operating income was 6.525 billion yuan, -6.44%; net profit of net income of $15 million, -117.36% of the same period; net profit after deduction of net income of $05 billion, -111.66% yoy.
Q3 Revenue declined year over year, and distribution channel performance was stable. 1) By product: 23Q1-3 liquid milk/other dairy products/animal husbandry products/other revenue was 122.23/56.72/14.49/1,181 billion yuan, respectively, +1.04%/-5.51%/-29.23%/+25.55%; 23Q3 liquid milk/other dairy products/animal husbandry products/other revenue was 42.18/14.83/3.96/371 billion yuan, -2.67%/-6.65%/-34.10%/+23.81%. 2) By region: 23Q1-3 Shanghai/foreign/overseas revenue was 58.19/95.88/5.119 billion yuan, respectively, +0.01%/-6.56%/+2.19%; 23Q3 Shanghai/overseas/overseas revenue was 18.42/32.70/1,356 billion yuan, respectively, -3.51%/-10.25%/+6.77%. 3) Sub-channel: 23Q1-3 direct sales/distribution revenue was 48.53/15.585 billion yuan, -11.99%/+0.75% year-on-year, respectively; 23Q3 direct sales/distribution revenue was 1,576/4.902 billion yuan, respectively, -20.27%/+1.73% year-on-year. In terms of the number of dealers, there were 466/3716 Shanghai/overseas at the end of 23Q3, respectively, a net increase of 10/113 over the beginning of the year and a net increase of 20/137 over the end of 23Q2.
Profitability is under pressure in the short term. The gross margin of the 23Q3 company was 15.52%, y-1.42pct; the 23Q3 company's sales/management/development/financial expense ratio was 12.98%/2.94%/0.31%/0.83%, respectively, +1.02pct/-0.45pct/-0.06pct/+0.22pct, and the overall cost rate increased year-on-year; 23Q3 net profit margin was -0.23%, year-on-year -1.50pct. The profit level declined in the third quarter.
The company's products continue to be promoted, and the channel network is gradually sinking. In terms of products, the company adheres to product innovation and continues to meet consumer needs. Thirty new products were developed and launched in the first half of the year. Three series of **** milk powder completed the registration of the new national standard and were successfully listed, and a variety of new ice cream products were launched. The company announced a brand renewal at the end of September. The products launched two new products, native DHA low temperature milk and probiotic low temperature yogurt, to accelerate the transformation to a segmented and functional track. In terms of channels, the company continues to strengthen the construction of channels and outlets, promote channel expansion and network subsidence, and further consolidate the channel foundation from township to town in East China. At the same time, we are actively developing new channels, increasing the layout of e-commerce channels, and formulating corresponding growth strategies for different types of e-commerce channels. In addition, the company accelerated digital transformation and upgrading, financial digitization projects accelerated in the first half of the year, and a number of factories and marketing centers completed system launch, effectively empowering the company's high-quality development.
Investment suggestions: In 2023, 2024, and 2025, the company's net profit is estimated to be 4.2 billion yuan, 490 million yuan, and 60 billion yuan respectively, up 15%, 19%, and 21% from the previous year, respectively. The current stock price corresponding to PE is 31, 26, and 21 times, respectively. First coverage, giving an increase in holdings rating.
Risk warning: risk of macroeconomic fluctuations, food safety risks.