Event: Mycorando releases its 2023 annual report. In 2023, the company achieved revenue of 4,049 billion yuan, -16.16%; realized net profit attributable to mother of 63.44 million yuan, or -53.90% year-on-year; realized net profit without deduction of 7.17 million yuan, or -89.63% year-on-year. Among them, 23Q4 achieved revenue of 974 million yuan, -2.65% year over year; realized net profit of 29.56 million yuan, +588.40% year over year; and realized net profit of 9.08 million yuan without return to mother, +142.28% year over year.
Comment:
Q4 Revenue was stable, and profits rebounded somewhat. Looking at Q4 alone, the company's revenue performance was stable year over month. Among them, the trade revenue for liquid milk, cheese and dairy products was 89.93 million yuan, 721 million yuan, and 160 million yuan, respectively, +18.85%, -20.70%, and +1199.00% compared with the same period last year. In terms of gross margin, Q4 gross margin reached 24.97%. The month-on-month performance was relatively stable, and the year-on-year decline was slightly larger. On the profit side, due to the reduction in equity incentive costs and the increase in government subsidies, management expenses fell sharply, and other income increased, resulting in a sharp increase in net profit returned to mother in Q4 in a single quarter.
Cheese's market share is steadily at the top, and profits are under pressure throughout the year. Looking at the annual level, the company's trade revenue for liquid milk, cheese and dairy products was 334 million yuan, 3.137 billion yuan, and 567 million yuan, respectively, -4.33%, -18.91%, and -5.44% compared with the same period last year. Despite the decline in the company's revenue due to market changes, the company's share of the cheese market exceeds 35% and the cheese stick market share exceeds 40% in the Kantar Consumer Index, ranking first in the industry and expanding its leading edge. In the cheese business, revenue for the ready-to-eat nutrition series, family table series, and catering industry series was 1,902 million yuan, 348 million yuan, and 888 million yuan, respectively, or -23.94%, -36.10%, and +7.61% compared with the same period last year. Due to the double fluctuation of raw material market conditions and exchange rates, the gross margin of the company's cheese sector and trade sector both declined year on year, causing the company's net profit margin to decline compared to the previous year, putting pressure on profit for the whole year.
Profit forecasting and investment ratings: The industry has broad space, and performance is expected to recover. Judging from the experience of developed countries, the cheese industry has plenty of space, and China's per capita consumption is expected to increase dramatically. On the one hand, the company is actively developing new products of different types to open up diversified consumer demand for cheese; on the other hand, the price of Australian cheese has gradually declined, and the price is close to the level of 19 years, which is expected to open up space for the company's performance on the cost side. We expect the company's 2024-2026 EPS to be 0.26/0.37/0.51 yuan, corresponding to the 2024-2026 53X, 37X, and 27X PE respectively, maintaining the company's “buy” rating.
Risk factors: food safety issues, increased competition in the industry