Incident: The company released its 2023 annual report, achieving full-year revenue of 1.92 billion yuan, +20.5% year-on-year; net profit to mother of 280 million yuan, +36.9% year-on-year. 23Q4 achieved revenue of 620 million yuan, +15.6% year over year; net profit to mother of 100 million yuan, +19.7% year over year.
Coconut drinks continue to grow rapidly, and the canned food business is progressing steadily. By category, beverages and canned products achieved revenue of 1.14 billion yuan (+22.2%) and 760 million yuan (+16.9%), respectively. 1. Coconut juice achieved revenue of 1.0 billion yuan, an increase of 24.4% over the previous year. 245ml blue tinned and 1.25L PET bottled coconut juice continued to be booming, achieving a total revenue of 760 million yuan throughout the year, accounting for 75.5% of the revenue of coconut juice products. 2. Canned fruit achieved revenue of 710 million yuan, an increase of 17.5% over the previous year. The two core products, canned yellow peaches and canned oranges, achieved revenue of 30/20 million yuan, respectively, +50.1%/+6.6% year-on-year. Canned yellow peaches are affected by the consumption boom. The increase in the product structure and reduction in raw material costs throughout the year boosted gross profit margins, and profitability increased steadily.
Gross margin increased significantly, and market cost investment increased. 1. The overall gross profit margin was 38.8%, up 5.2 pp from the previous year, mainly due to an increase in the share of coconut juice with a high gross margin in the product structure, a decline in commodity prices such as packaging materials and accessories, and a decrease in the purchase unit price of oranges to increase production. 2. Sales/management/ R&D/finance expenses ratio 12.4%/6.4%/0.2%/-0.4%, +2.0pp/+0.6pp/+0.1pp/+0.0pp, respectively. The company's sales expenses rate has increased significantly, mainly due to increased personnel investment to maintain terminal customer conditions. 3. The overall net interest rate was 14.5%, up 1.7 pp year on year, and profitability increased steadily.
The traditional main business is resilient, and the expansion of new products is worth looking forward to. 1. In the short term, the company's traditional business base is relatively stable. Coconut drinks and canned fruit have competitive advantages, and there is still plenty of room to sink under the impetus of refined channel management. The company is increasing its ready-to-drink channel expansion efforts. On the basis of about 700,000 effective terminal outlets in 2023, the company strives to expand to 1 million outlets by 2024, while continuing to increase distribution and catering channel development, monitoring the layout and development of outlets through informatization means, and strengthening product display and freezer display. 2. In the medium to long term, the dividends in the coconut category continue to stand out under the trend of healthy consumption. The company lays out coconut cultivation to enhance supply chain capacity and uses the advantages of existing distribution channels to increase promotion efforts. It is expected to create a second growth curve in the coconut water sector through coconut sharks. The company actively embraces emerging channels such as snack franchise chains, and has successfully introduced new canned food products into snack mass sales channels, which is expected to contribute to new volume throughout the year.
Profit forecasting and investment advice. Net profit due to mother for 2024-2026 is expected to be RMB 334 million, RMB 391 million, and RMB 456 million, EPS is 0.75 yuan, 0.87 yuan, and 1.02 yuan respectively. The corresponding dynamic PE is 21 times, 18 times, and 15 times respectively, maintaining the “buy” rating.
Risk warning: Food safety issues, risk of raw material price fluctuations, channel development or failure to meet expectations.