Investment advice: First coverage, giving an increase in holdings rating. The company's revenue for 2023-2025 is estimated to be 86.89/106.36/12.508 billion yuan (RMB, same below), respectively, of 21.12%/22.42%/17.60% of the previous year; net profit of 4.10/5.95/772 million yuan, respectively, 78.24%/45.23%/29.68% of the previous year; the corresponding PE for 2023-2025 is 43x/29x/23x, respectively.
A hot pot and barbecue food supermarket with a chain of ten thousand stores. Guoquan Food is a one-stop food product leader for at-home meals. It provides consumers with ready-to-eat, ready-to-heat, ready-to-cook and ready-to-eat ingredients. It focuses on at-home hot pot and barbecue products, and is positioned as a “tasty, convenient and inexpensive” channel brand. High SKU, high cost performance, and easy access are the core competitive advantages of the pot industry: ① Adopt the B2B2C model to establish a franchise network of 10,000 stores covering the whole country; ② improve upstream bargaining power and control terminal prices under scale effects through vertical integration of the supply chain; ③ Improve R&D efficiency, inventory management efficiency, store operation efficiency, and sales efficiency through full-link digital empowerment.
Meal products for eating at home meet the demand for “how fast and how much to save” and have potential for growth. The scale of the home-eating market has grown rapidly in recent years. The driving factors include: ① Demand side: increasing demand for healthy eating, as well as changes in lifestyle and eating habits; ② supply side:
Food industrialization and the rapid development of cold chain logistics, etc. In view of advantages such as convenience, hygiene, and affordability, the home-eating food products market has become the fastest-growing segment in the home-eating market. The home-at-home meal market has many participants and a fragmented pattern. Supply chain capability is a core competitive factor. According to Frost & Sullivan, in 2022, Guowan Foods ranked first in the retail market for food products at home in China, with a market share of 3.0%.
There is still room for stores to double, and supply chain capacity is expected to be reused to other consumption scenarios and product categories. ① Store encryption: Guoquan has a high density of stores in the new first-tier, second-tier, and third-tier cities, while the fourth and fifth tier cities and first-tier cities still have great potential to open stores. We have estimated that there are about 25,000 Guoquan stores. According to the prospectus plan, the company will also develop overseas business, and plans to open Black Pearl stores in Hong Kong, Macau and Southeast Asian cities to enter the high-end food market. ② Expanding consumption scenarios and product categories: Cookware continues to create products other than hot pot, increasing the share of barbecue revenue, and exploring categories including fruit, snacks, beverages and alcohol to provide products for consumption scenarios such as camping, living room snacks, fruit snacks, and one-person meals to meet the diverse needs of consumers.
Risk warning: Opening stores falls short of expectations, food safety risks, and increased competition in the industry.