Incident: On March 25, the company issued an announcement. Revenue of 2023 was 1.92 billion yuan, +20.5% year-on-year; net profit to mother was 280 million yuan, +36.9% year-on-year. 23Q4 revenue was 620 million yuan, +15.6% year on year; net profit to mother was 100 million yuan, +19.7% year over year.
Category dividend release and continuous intensive cultivation of superimposed channels contributed to the high growth of coconut drinks in 23Q4. 23Q4 revenue was +15.6% year over year, and there was a rapid increase in both month-on-month and year-on-year growth. When split, coconut drink revenue exceeded 1 billion yuan, up about 30% year on year, and canned revenue fell by about 13% year on year. Among them, the high increase in coconut drink is expected to mainly benefit from: 1) The company laid out the peak season ahead of schedule to seize the market through work such as container display+outlet maintenance; 2) In the context of the slow pace of macroeconomic recovery, the company's product cost performance advantages became more obvious; 3) The company continued to release the dividends of intensive beverage channel farming policies in 2023 There are 2157 dealers, and Compared to +13.4%, the number of terminal outlets increased to 700,000; 4) The base for the same period in 22Q4 was low.
Product structure optimization and cost reduction drive continuous improvement in 23Q4 net margin. The gross margin of 23Q4 was 41.1%, +6.8cpts compared to the previous year. It is expected to mainly benefit from: 1) product structure optimization, a higher share of revenue from coconut drinks with higher gross margin; 2) the cost price reduction in 23Q4, with the unit price of oranges being more than -30%.
The 23Q4 sales expense ratio was 12.5%, +5.3 cpts compared to the previous year. This is mainly due to the increase in the share of coconut drinks with a high investment scale and the company's increased personnel investment in maintaining the terminal market. The 23Q4 management cost rate was 5.7%, compared with +1.1 pcts, mainly due to an increase in personnel labor costs. The net interest rate for 23Q4 was 16.6%, +0.6pcts year over year, continuing the improvement trend of the first three quarters of 23.
The main business is expected to remain resilient in 24Q1, and the 24Q2 focus on the pace of new product expansion. In the short term, the 24Q1 revenue side is expected to remain resilient. Although there is some base pressure on canned food, coconut drinks are expected to continue to be booming, mainly due to: 1) coconut-based category dividends continue to be prominent under the health consumption trend; 2) the shipping pace extended to January due to the late Spring Festival in '24; 3) benefiting from the release of demand potential for the sinking market during the Spring Festival and continued intensive channel cultivation; 4) Refer to the company's announcement regarding the procurement budget for coconut milk, and it is expected that coconut drink revenue will grow rapidly throughout the year 24. Looking at the long term, 1) in the traditional business, the company has a certain competitive advantage in canned fruit and large packages of coconut drinks, and is expected to achieve steady growth under the impetus of refined channel management; 2) The new business, on the one hand, is successfully introduced into the snack sales channel, which is expected to continue to contribute revenue throughout the year. On the other hand, it is expected to improve supply chain capacity through the layout of coconut cultivation. At the same time, it is expected to successfully build a second growth curve in the coconut water sector in line with healthy consumption trends. It is recommended to pay close attention to the pace of business expansion.
Investment advice: Using the 2026 profit forecast, net profit from 2024 to 2026 is expected to be 3.3/38/450 million yuan, respectively, +17.1%/16.2%/18.0%, EPS of 0.73/0.85/1 yuan, and corresponding PE is 20/17/15X, respectively. However, considering the uncertain pace of new products and new channel expansion, the “careful recommendation” rating is maintained for the time being.
Risk warning: risk of competition exceeding expectations, risk of falling industry demand, risk of new business expansion falling short of expectations, food safety risk.