Incident: The company released its 2023 performance report. In 2023, it achieved revenue of 1,923 million yuan, +20.5% year-on-year; net profit to mother was 278 million yuan, +36.9% year-on-year.
Comment:
2023Q4 yellow canned food grew steadily, and the revenue growth rate of coconut juice increased sequentially. 2023Q4 achieved revenue of 617 million yuan, +15.6% year-on-year. Looking at the product structure, canned food revenue was -2.7% to 192 million yuan, mainly due to revenue from other canned goods -21.1 million yuan, offsetting revenue from canned yellow peaches +15.91 million yuan year-on-year; beverage revenue was +26.5% to 420 million yuan, of which coconut juice drinks were +29.8% to 380 million yuan, which increased the growth rate compared to Q3. We think the main reason is that Q4 dealers are actively preparing goods in the face of Spring Festival gift demand. Looking at the whole year, the company's canned revenue was +16.92% to 758 million yuan, accounting for 39.4%; beverage revenue was +22.21% to 1,143 billion yuan, accounting for 59.5%, or +0.8pct month-on-month. Of these, coconut juice achieved revenue of 1 billion yuan, +24.34% over the same period. We think the main reason is that the company is focusing on increasing the development of distribution and catering channels.
Gross margin increased significantly, and market investment increased. On the profit side, in 2023, the company achieved net profit of 278 million yuan, +36.9% year-on-year, and a net profit margin of 14.5% to mother, +1.7 pct year-on-year. We believe the main reason was a significant increase in gross margin to offset the impact of market investment. Specifically, 1) Affected by 2023H1 price increases and raw material prices falling, etc., the company's gross margin was +5.2 pct year on year; 2) In terms of cost ratio, the company increased personnel investment to maintain terminal customer conditions. Sales expenses in 2023 were +43.09% year over year, sales expenses rate +1.95 pct year over year, and management expenses rate +0.58 pct year over year.
Profit forecast and investment rating: The market believes that the company's growth is insufficient. We believe that the company has been deeply involved in the canned food business for more than 20 years, and market demand is stable; coconut juice has a good brand base for banquets and gifts, and is expected to accelerate development in the future as the company expands terminal outlets in 2023. Under the trend of natural health, the coconut water industry is growing rapidly. We are optimistic about the performance of the company's coconut water brand Coconut Shark. In terms of new channels, the company actively embraces mass sales channels for snacks. We believe that canned food and coconut drinks are expected to increase well through this channel. In summary, we expect the company's EPS in 2024-2026 to be 0.82, 1.09, and 1.40 yuan respectively, corresponding to the closing price on March 25, 2024 (14.76 yuan/share) PE will be 17.94, 13.51, and 10.53 times, maintaining a “buy” rating.
Risk factors: growth of new products and new channels falls short of expectations, fluctuations in raw material prices, etc.