Incident: The company announced its 2023 annual results. In 2023, it is expected to achieve net profit of 575 million yuan to 685 million yuan, an increase of 63.22% to 94.44%; deducted non-net profit of 410 million yuan to 520 million yuan, an increase of 50.98% to 91.49%; EPS is expected to be 0.204 yuan/share to 0.243 yuan/share. 23Q4 is expected to achieve net profit of -270 million yuan to -380 million yuan (22Q4 is -320 million yuan); net profit without deduction to mother is estimated to be between 350 million yuan and -450 million yuan (-360 million yuan in 22Q4).
On the revenue side, U8 products continue to drive volume growth and structural upgrades. The large single product U8 continues to be released, which is expected to drive a sharp rise in volume and price throughout the year. U8 is a major core product that has been cultivated by the company in recent years. Under its leadership, the company's product portfolio continues to grow, and the proportion of high-end products continues to increase, driving volume growth and structural upgrading.
On the profit side, governance reforms drive continued improvement in profitability. The company's gross margin and net margin continued to rise, and the results of governance reforms were unleashed. In 2023, the company's net profit and net profit after deduction grew rapidly year-on-year, benefiting from structural upgrades, cost management improvements, and improved governance efficiency. The company's market-based mechanism reform stimulated team vitality, operational changes achieved efficiency improvements, and production and supply chain jointly improved quality and efficiency. Under the combined effects, costs and expense ratios controlled the downward trend, and jointly promoted the release of the company's profit flexibility.
U8 large single products continue to be released to help upgrade the product matrix. U8 large single products continue to be released to help upgrade the product matrix. Looking at the whole year, as the nationalization process progresses, U8 is expected to drive a new wave of sales from catering channels to distribution channels, and the current situation of high volume growth is expected to continue. At the same time, the company proposed “using U8 to drive the take-off of Liangyu products”, take off V10 and S12, and launch Fresh Beer 2022, focusing on both channel cultivation and product structure upgrading. Along with the continuous improvement of internal governance logic, the improvement of cost efficiency and human efficiency, and long-term optimism about the improvement of the company's profitability, it is expected that operating vitality will continue to be unleashed.
Investment recommendations: It is expected that 2023-2024 will achieve revenue of 146.02/16.015 billion yuan, an increase of 10.61%/9.67%; achieve net profit to mother of 6.29/893 million yuan, an increase of 78.57%/41.94% year on year; achieve EPS of 0.22/0.32 yuan, corresponding to PE 40/28 X, giving a “gain” rating.
Risk warning: New product growth falls short of expectations, fluctuating raw material prices, food safety risks.