The company announced the 2024 restricted stock incentive plan and the three-year strategic plan for the Delicious Fresh subsidiary. The equity incentive assessment is based on 2023. Listed companies' revenue for 2024-2026 is not less than 57.56 billion yuan, 67.84, and 10.021 billion yuan respectively, with year-on-year increases of 12%, 18%, and 48%, respectively, and nearly doubling in 2026 compared to 2023.
The connotation plus epitaxial two-wheel drive shows the company's confidence in unleashing the results of the reform. Operating margins of at least 15%, 16.5%, and 18% are required for 2024-2026, and operating profits of 883, 11.19, and 1,804 million yuan, with year-on-year increases of 36%, 30%, and 61%, respectively. The restricted stock incentive plan is to grant no more than 14.388 million shares, accounting for 1.83% of the total share capital, covering 7 board members and senior management members and 322 middle management, at a price of 14.19 yuan/share. At the same time, the company announced a three-year strategic plan for the Delicious Fresh subsidiary. The business target is to reach 10 billion dollars in revenue and 1.5 billion in operating profit by 2026. The benefits of the company's reforms continued to be realized. Following the lawsuit settlement at the end of last year, equity incentives and the three-year strategic plan for Delicious Fresh were implemented. We look forward to the subsequent withdrawal of Yangxi Chubang's minority shares and an accelerated focus on the condiment business.
The company released its 2023 annual report. In 2023, the company achieved revenue of 5.139 billion yuan, a year-on-year increase of -3.78%; achieved net profit of 1,697 million yuan, with a loss of 592 million yuan last year; realized net profit of 524 million yuan after deduction, an increase of -5.79% over the previous year. Among them, 2023Q4 achieved revenue of 1,186 billion yuan, a year-on-year increase of -14.37%; realized net profit of 2,969 billion yuan, with a loss of 1,011 billion yuan in the same period last year; realized net profit of 61 million yuan after deduction, an increase of -60.02% over the previous year.
Short-term adjustments put pressure on condiment Q4 revenue, and management expenses increased. The company's condiment revenue in 2023 was 4.866 billion yuan, a year-on-year increase of -0.45%. Revenue from soy sauce, chicken extract, cooking oil, and other condiments was 30.28, 6.76, 4.46, and 716 million yuan, up 0.09%, 13.44%, -10.62%, and -6.79%, respectively. Benefiting from falling raw material costs, the company's gross margin increased 1.01 pct to 32.71% in 2023. Revenue from condiments in 2023Q4 was 1,124 billion yuan, up -13.62% year over year, mainly due to internal management integration adjustments affecting short-term revenue after the restructuring of the company's board of directors. Among them, revenue from soy sauce, chicken extract, cooking oil, and other condiments was 6.73, 1.89, 1.07, and 154 million yuan, with year-on-year increases of -17.25%, 18.13%, -18.69%, and -21.13%, respectively.
2023Q4's gross margin increased 1.49 pcts year over year to 33.14%, and continued reduction in benefit costs. In 2023, the company's sales and management expense ratios were +0.05 and +1.28 pct, respectively, to 8.90% and 7.34%, respectively. The increase in management expenses was mainly due to increased expenses such as compensation for the termination of labor relationships and consulting fees. 2023Q4's sales and management expenses rates were +0.73 and +5.83 pcts year-on-year, respectively, to 10.66% and 11.16%, respectively. Reform costs were concentrated in Q4.
Profit forecast: The company's reform ideas are clear, motivated, and steady. We look forward to the implementation of more reforms in the future to accelerate revenue and profit growth. According to the company's annual report and equity incentive target plan, we raised our profit forecast. We expect the company's revenue for 2024-2026 to be $58.00, 68.06, and 7.812 billion yuan, respectively (58.43 billion yuan and 6.693 billion yuan for 24-25), net profit to mother of 7.64, 9.39 billion yuan, and 1,133 billion yuan (originally $695 and 810 million yuan in 24-25), and EPS of 0.97, 1.20, and 1.44 yuan respectively. We expect that the subsidiary's revenue for 2024-2026 will be $55.35, 6.525, and 7.512 billion yuan, respectively, and net profit to the mother will be 725, 8.85, and 1,054 billion yuan respectively. Excluding the real estate business value of about 2 billion yuan, the current stock price corresponding to the condiment business PE is 26 times, 21 times, and 18 times, maintaining a “buy” rating.
Risk warning events: food safety risks; increased competition for middle and high-end soy sauce; nationalization falling short of expectations; risk of real estate divestment matters failing or progressing less than expected; risk of untimely update of research information