Incident: In 2023, the company achieved revenue of 5.139 billion yuan, -3.78%; net profit to mother of 1,697 million yuan, which turned a loss into a profit; net profit of 524 million yuan, -5.79% year over year; of these, 2023Q4 revenue was 1,186 billion yuan, -14.37% year over year; net profit to mother was 2,969 million yuan, which turned a loss into a profit; net profit after deducting non-return of 61 million yuan, -60.02% year over year.
The performance turned a loss into a profit, and the main business was under slight pressure. Delicious Fresh achieved revenue of 4.932 billion yuan in 2023, -0.45% year-on-year, of which 2023Q4 achieved revenue of 1,142 billion yuan, or -13.35% year-on-year. The decline in main business performance was mainly due to a large decline in edible oil sales. The loss was turned into a profit due to land litigation settlement. The previous debt was recovered by $2,925 billion, increasing non-operating income in 2023. By category, soy sauce/chicken powder/cooking oil/others achieved revenue of 30.28/6.76/4.46/716 million yuan respectively, or +0.09%/+13.44%/-10.62%/-6.79% compared to the same period; 2023Q4 soy sauce/chicken powder, cooking oil/others achieved revenue of 6.
$73/1.89/1.07/ $154 million, -17.25%/+18.14%/-18.69%/-21.13% YoY. Chicken extract and chicken powder have always been one of the company's important single products. Thanks to the recovery in demand for downstream catering, it maintained a high growth rate; however, soy sauce was under pressure, mainly due to the impact of organizational structure reforms in the fourth quarter.
Cost improvements have led to an increase in gross profit, and the cost rate for the period has increased. The gross margin for 2023/2023Q4 was 32.71%/33.14%, compared with +1.01pct/+1.49pct. The increase in gross margin was mainly due to a decrease in the purchase unit price of condiment ingredients and optimization of the product structure. On the cost side, 2023 sales/management/R&D/finance rates were +0.04/+1.28/+0.17/ -0.04pct; of these, 2023Q4 sales/management/R&D/finance rates were +0.73/+5.83/+0.13/+0.04pct year-on-year. The increase in sales rates is mainly due to pressure on revenue, and the increase in management rates is mainly due to increased expenses due to personnel reforms.
The introduction of equity incentives boosted confidence and created a new kitchen state in three years. The company issued an equity incentive plan with an award price of 14.19 yuan/share, divided into 3 fiscal years of 2024-2026. The assessment target is based on 2023, and the 2024/2025/2026 revenue growth is required to achieve 12%/32%/95% revenue growth respectively. This plan deeply binds the company's executives and core cadres to ensure that all parties have the same interests, enhance the company's cohesion, and boost confidence in development. Furthermore, in order to achieve a high growth rate plan, the company is also actively searching for suitable mergers and acquisitions to further open up the performance ceiling. In addition, the company has formulated a strategic planning plan for the next three years, putting forward the vision of rebuilding a Chubang in three years, and striving to achieve the goals of 10 billion yuan in revenue and 1.5 billion yuan in operating profit by 2026. Continue to be optimistic about the opportunities brought by the company's institutional reform. The company's management margins are improving. In the future, as the revenue growth rate climbs, there is still plenty of room for flexibility.
Investment advice: We expect the company to achieve revenue of 58.27/68.72/8.245 billion yuan in 2024-2026, +13.39%/17.93%/19.97%, net profit to mother of 7.81/9.59/1,266 billion yuan, -54.00%/+22.91%/+32.00%, EPS 0.99/1.22/1.61 yuan respectively, corresponding PE of 27.94/22.73/17.22X, maintaining the company's “gain” rating.
Risk warning: the implementation of the new policy falls short of expectations; risks such as food safety risks; fluctuations in raw material prices.