The company announced 2023 results
Q4: Revenue of $1,186 billion (-14.37%), net of $2,969 million (+393.72%), net of $61 million (-60.02%).
Q1-4: Revenue of $5.139 billion (-3.78%), net of $1,697 million (+386.53%), net of $524 million (-5.79%).
The performance was close to the center of the previous forecast.
The company plans to pay a dividend of 0.4 yuan per share, corresponding to a dividend rate of 18.08% (31.17% last year). According to the shareholder return plan, the dividend rate is expected to be no less than 30% for 24-26.
Q4 Split: Active adjustment
Product: 23Q4 Soy Sauce/Chicken Essence/ Cooking Oil business changed -17%/+18%/-18% year over year, respectively. The decline in soy sauce Q4 was mainly due to the company actively adjusting the market. Chicken essence increased by double digits year-on-year throughout the year, and the category boom was high. Sales of cooking oil are weak.
Region: 23Q4 East/ South/ Midwest/ North segment showed year-on-year changes of -15%/-6%/-6%/-43%. Q4 companies actively adjusted the market. On a full-year basis, the Midwest market was +7% year-on-year, and the low penetration market expanded more strongly.
Settlement of the main cause lawsuit after 23 years
The main reason for the reversal of losses in '23 was the joint settlement between the company and the industry: the estimated liabilities of $1,178 million/$1,747 billion, which were calculated by the 22A/23H1 company, respectively, were recovered.
Gross margin/net profit margin after deduction for 23 years were +1/-0.2pct year-on-year, respectively: gross margin increased the cost of benefits, and deducted non-net interest rates were relatively stable. Among them, the sales expense ratio was basically the same year on year. The main fluctuation was the management fee ratio +1.3 pct year over year, due to the termination of labor relationship compensation and an increase in consulting fees during the reform period.
Release Incentive+Delicious Food Multiply Plan
Equity incentives: The company plans to grant no more than 14.388 million shares (accounting for 1.83% of the current share capital). A total of 239 people (including 7 senior directors and supervisors) will be awarded at a grant price of 14.19 yuan (closing price of 26.39 yuan on 2024/03/29).
Unlock targets: 24/25/26 revenue +12%/+18% YoY, operating margin of at least 15%/16.5%/18% (12.31% in '23), and ROE of at least 14%/15.5%/20% (13.59% in '23).
At the same time, the goal of multiplying delicious freshness for 3 years was announced:
The revenue target for 26 years is 10 billion, and the operating profit target is 1.5 billion. The layout is nationwide, and endogenous and extrinsic growth are growing together.
Investment advice
Our point of view:
After the active reform, the company has now gone light for 24 years. We expect Q1 revenue to grow by double digits over the same period last year. The release of incentives and delicious fresh strategies is exciting, further consolidating the company's long-term growth center.
Profit forecast: Combined with the above, we expect that in 2024-2026, the company will achieve total operating income of 57.77/68.28/10.01 billion yuan, +12.4%/+46.6% year-on-year; achieve net profit of 7.53/9.51/15.35 billion yuan, year-on-year, -55.7%/+26.4%/+61.4%; the current stock price corresponding PE is 28/22/14 times, respectively. After excluding real estate, PE is about 21x. The company has the opportunity to accelerate growth. The inflection point has been reached, and the “buy” is maintained “Enter” rating.
Risk warning
Downward macroeconomic risks, increased industry competition, regional expansion falling short of expectations, and new product releases falling short of expectations. The epidemic has repeatedly brought pressure on sales, catering repairs have fallen short of expectations, and food safety incidents.