Incident: The company released its 2023 annual report on March 26, 2024, and achieved annual revenue of 4,049 billion yuan (yoy -16.16%), achieved net profit of 63 million yuan (yoy -53.90%), and realized net profit of 0.7 billion yuan (yoy -89.63%) after deducting non-return to mother. Looking at a single quarter, the 2023Q4 company achieved revenue of 974 million yuan (yoy -2.65%), achieved net profit of 30 million yuan (yoy +588.4%), and achieved net profit of 90 million yuan (yoy +142.28%) after deducting non-return to mother.
Our analysis and judgment:
1. Revenue side: Revenue declined slightly, and it is still in the leading position in the industry by category. The company's ready-to-eat nutrition series achieved revenue of 1,902 billion yuan, or -23.93% over the same period. Among them, room temperature cheese sticks benefited from the expansion of channels and the scene broke the trend. The family dining table series achieved revenue of 348 million yuan, down from the high base in the same period last year; the catering industry achieved revenue of 888 million yuan, +7.61% year over year; and the trade business achieved revenue of 567 million yuan, or -5.44% year over year. In '23, the company closely developed around the four core strategies of “product leadership, brand positioning, channel cultivation, and management upgrading”. Although revenue declined due to the market environment, according to the Kantar Consumer Index household model, the company's share of the cheese market further increased, ranking first in the industry.
2. Profit side: Under pressure due to double fluctuations in the raw materials market and exchange rates, 2023Q4 achieved net profit of 30 million yuan, compared to the same period last year of -08 billion yuan, achieved net profit without deducted net profit of 190 million yuan, and -21 million yuan in the same period last year. At the profit margin level, the company achieved a net interest rate of 1.57% to mother for the whole year, -1.24pct year on year; 2023Q4 achieved a net interest rate of 3.04% to mother, +3.86pct year on year. Due to the double impact of exchange rate fluctuations and rising costs of the company's raw and auxiliary materials, the gross margin of household dining tables and catering industry products declined, but the overall decline in gross margin remained within a manageable range.
3. Investment advice: Facing complex and changing external challenges, on the product side, the company continues to develop new categories and is committed to broadening the application scenarios of cheese to explore new growth points. On the channel side, the company continues to deepen channel layout and enhance channel operation capabilities to ensure that products can better reach consumers. We expect that as the company continues to focus on the cheese business and continues to maintain and expand its market advantage, compounded by cost improvements brought about by the gradual easing of pressure on raw materials, the company's performance is expected to recover quarterly. We expect the company's net profit to be 1.7/26/320 million yuan in 24-26, corresponding to current PE being 42X/27X/22X, respectively, maintaining a “buy” rating.
Risk warning: risk of raw material price fluctuations, risk of channel reform falling short of expectations, risk of increased industry competition.