Incidents:
Tomson Beijian released its 2023 annual report. In 2023, the company achieved operating income of 9.407 billion yuan, an increase of 19.66% over the previous year; net profit to mother was 1,746 billion yuan, an increase of 26.01% over the previous year. Single 23Q4 achieved operating income of 1,625 million yuan, a year-on-year decrease of 4.53%, and a net profit loss of 155 million yuan to mother.
In the first year of the new VDS cycle, immune products performed well
Splitting by brand, increasing residents' health awareness and focusing on the main brand strategy, the company's main brand achieved revenue of 5.40 billion yuan in 2023, an increase of 21.58% over the previous year. The largest single product, Jianliduo, achieved revenue of 1,179 billion yuan, a year-on-year decrease of 2.52%. In 2023, the domestic probiotic brand Life-Space achieved revenue of 445 million yuan, an increase of 46.84% year on year, and the overseas brand LSG achieved revenue of 989 million yuan, an increase of 23.03% year on year (211 million Australian dollars in Australian dollar terms, up 22.38% year on year). With the split of channels and the restoration of offline consumption scenarios such as pharmacies after the epidemic, the company's offline channel revenue increased 12.39% year-on-year in 2023, and offline channel revenue accounted for about 58.10% of domestic revenue. Driven by direct marketing reforms and new platforms such as Doukuei Live, the company's online channel growth rate reached 27.53% year-on-year.
Expenses have increased, and profits are under pressure
In 2023/23Q4, the company's gross margin was 68.89%/65.22%, respectively, +0.60/-1.26pct.
In 2023/23Q4, the company's sales expenses rate was 41.02%/69.58%, respectively, compared to +0.71/5.90pct. We believe it is mainly due to increased cost investment under the “multi-brand, omni-channel, all-category” strategy, especially the increase in online channel digital media marketing and live streaming promotion. In 2023, the company's marketing expenses were 1,017 million yuan, an increase of 38.16% over the previous year, and the platform fee was 903 million yuan, an increase of 23.52%. In 2023, the company's overall net profit margin was 18.91%, +0.96pct year-on-year. Short-term profits are under pressure due to increased cost investment, but in the medium to long term, the online channel layout may lay the foundation for future growth.
Profit Forecasts, Valuations, and Ratings
The company is a leader in the domestic VDS industry, consolidating the offline foundation and building online channels, and is expected to continue to benefit in the context of aging. However, considering the intensification of competition in the industry and the short-term pressure on the profit side, we expect the company's 2024-2026 revenue to be 103.21/113.51/12471 billion yuan, with year-on-year growth rates of +9.72%/9.98%/9.87%, respectively, and net profit to mother of 19.39/21.70/2,428 billion yuan, with year-on-year growth rates of 11.01%/11.93%/11.88%, EPS 1.14/1.43 yuan/share, respectively. Twenty times PE in 2024, corresponding to a target price of 22.80 yuan, maintaining the “buy” rating.
Risk warning: risk of product quality and food safety, risk of weakening competitive advantage of offline channels, risk of increased market competition, etc.