2023 results are in line with our expectations
The company's 2023 revenue was +13.5%, and after deducting non-net profit (mainly due to the impact of listing fees, etc.), +15.8% year over year. This performance is in line with our expectations.
Development trends
The company's online business and corresponding freshly stewed bird's nest and bird's nest+ categories achieved high growth in 2023, driving revenue performance in 2023 to meet market expectations. 1) In 2023, the company's online business increased by +17.7% in revenue by 2ppt. According to Jiuqian data, bird's nest sales on Tmall and Jingdong platforms in 2023 were 3.34 billion yuan, +1% year over year, while sales on corresponding platforms were +15.7%, and the market share increased 3.85ppt to 29.7% year over year. We believe that the company's online relative price advantage and the power of its omni-channel brand to online business is the core of rapid growth. 2) The company's offline channels and core single product, Wan Yan, are still recovering from the post-pandemic growth rate. The company's offline channel business revenue was +8.6% in 2023, with revenue from offline distribution business +6.6% (number of dealers -3.8% /single dealer revenue +10.8% /single store factory-caliber sales revenue of about 790,000 yuan +1.3%). Further dealer store opening encryption is the main source of growth for offline business at this stage. We believe that the company category can choose to place a single store's revenue in the short term or remain stable, bucking the trend of offline channels Make higher demands.
The gross margin and sales expense ratio remained stable, leading to +15.8% year-on-year deduction of non-net profit in 2023. In 2023, due to slight optimization of the online channel competition pattern and the company's own efficiency improvement measures, the company's online channel gross margin increased 0.5ppt year-on-year, offsetting the gross margin of offline business -0.4ppt year-on-year and the overall gross margin of -0.1ppt year-on-year due to changes in product structure due to weak consumption power. At the same time, as the company strengthened its advantages in private operations and controlled total air advertising, the company's sales expense ratio was -0.4ppt year-on-year.
Looking ahead, we believe that maintaining the potential of online channels and the steady expansion of offline channels is the core focus.
The company will further promote bird's nest porridge products through online channels in 2024. We recommend paying attention to the additional increase it brings and maintaining the potential power of online channels; the company has also launched a series of measures to expand offline channels, including boosting the maintenance and operation of private traffic and strengthening investment in key regions, with a view to achieving steady growth in the context of weak consumption power. We recommend focusing on the subsequent expansion process of offline channels.
Profit forecasting and valuation
We maintain our profit forecast for 2024/25, with a target price of HK$12, a target price corresponding to 20/16XP/E. The current stock price corresponds to 15.6/12.4XP/E in 24/25 with 24.4% upside compared to the target price, maintaining an outperforming industry rating.
risks
Weak macro-consumption has put pressure on the industry's growth rate, the industry's competitive pattern has deteriorated, upstream raw material supply safety, downstream channel inventory backlog, new product performance falls short of expectations, bird's nest public opinion events, risk of dependency on a single product, and risks to the company's strategic sustainability after listing.