Incident: The company released its 2023 annual report. In 23/23Q4, the company achieved revenue of 1,923/617 million yuan, an increase of 20.47%/15.58%; net profit to mother was 278/103 million yuan, an increase of 36.85%/19.71%.
On the revenue side, coconut juice and canned fruit are working together to drive revenue growth. 1) Coconut Drink: The company's 23/23Q4 coconut drink achieved revenue of 1,000/379 million yuan, +24.37%/29.91% year-on-year. The company's 23Q4 coconut juice grew well, thanks to the entry into the Spring Festival preparation period, and the expansion of outlets and channel decline. 2) Canned fruit: The company achieved revenue of 196/055 million yuan for canned oranges in 23/23Q4, +6.65%/-12.88% year-on-year; canned yellow peaches achieved revenue of 2.97/0.69 billion yuan, +50.12%/11.01% year-on-year. The epidemic boom in canned yellow peaches accelerated growth throughout the year, and the 23Q4 high base pressure weighed on the growth rate. 3) In addition, the company explores emerging businesses such as coconut water and thick coconut milk, and is expected to gradually expand this year.
On the profit side, gross margin improved significantly, and the performance growth rate was impressive. The company's gross margin/net margin in 2023 was 38.8%/14.5%, +5.2/1.7 pcts, respectively; 23Q4 was 41.1%/16.6%, respectively, +6.9/0.6pcts year on year. The main reasons for improving profitability: 1) falling prices for packaging materials and accessories; 2) increased production of oranges and lower procurement costs in terms of fruit raw materials. 3) 22Q2-3 raised the price of canned yellow peaches and oranges. In terms of expenses, the sales/management/R&D/finance cost rates in 23 were 12.4%/6.4%/0.2%/-0.4%, respectively, compared with +2.0/0.6/0.1/0.0pcts. The increase in sales expense ratios was large, and companies increased their personnel investment in maintaining the terminal market.
Strengthen the development of new and old business channels, and the completion of the project is expected to contribute to new volume. Looking ahead to the whole year, on the one hand, the company will increase outlets, expand channels, and display in the basic market business. By the end of this year, the goal is to expand to 1 million outlets, increase the development of distribution and catering channels, and actively embrace emerging channels such as mass snack sales.
On the other hand, speed up the layout of new businesses, such as the launch of Coconut Shark Coconut Water series products, and the development of products such as thick coconut milk in restaurants, coffee, tea, and other corporate customers. Furthermore, on the production capacity construction and raw material layout side, the construction project with an annual output of 136,500 tons of beverages and canned goods is expected to be put into use this year. At the same time, the implementation of Vietnam's coconut processing project will be accelerated, and the layout of the coconut+ industry will be empowered.
Investment advice: The company is expected to achieve revenue of 22.4/26.2/3.02 billion yuan in 2024-2026, +16.5%/17.1%/15.1%; realized net profit to mother of 3.3/40/4.6 billion yuan, +17.5%/20.9%/16.3% year over year, EPS of 0.73/0.88/1.03 yuan, corresponding PE 21/18/15 times, maintaining the “increase” rating.
Risk warning: New product growth falls short of expectations, fluctuating raw material prices, food safety risks.