It is the largest retailer in the industry that is deeply involved in eating meals at home. Boquan is essentially a B2B2C supply chain company. Its main revenue comes from selling home-cooked hot pot, barbecue and other home-cooked food products to consumers through franchise stores. With the ability to rapidly expand stores, the company has established a strong sales network across the country, gradually spreading to all regions of the country with Henan as the core, and achieved a 10,000 store layout in just 6 years, providing an efficient platform for the company's products to reach consumers all over the country. In 2022, the company has accumulated more than 100 million orders, thus becoming the largest retailer of home-cooked food products with its own brand in China. The increase in retail orders has driven the company's revenue growth and profit improvement. In 2022, the company achieved its first profit from net profit to mother, which was 230 million yuan. Currently, the company still has plenty of room to expand its stores in the western and northeastern regions. We believe that with the further development of stores, the company's performance is expected to grow steadily.

The industry is growing rapidly, and the direction of resource integration is clear. The food products industry in which the company is located is still in a stage of rapid growth. Market competition is scattered, and there are few leading manufacturers that are deeply involved in similar companies. Home-eating meal products have the two major advantages of adapting to a fast-paced lifestyle and satisfying consumers' pursuit of healthy eating, and will become the fastest growing part of the family dining market. At the same time, the development of the cold chain logistics industry has provided a guarantee for improving the cost effectiveness of home-eating meal products. It is estimated that the size of the home-eating meal products market will reach 940 billion yuan by 2027. Affected by fluctuations in raw material prices and increased demand from one-stop suppliers, there is a clear trend of integrating upstream and downstream resources for home-dining products companies. On the one hand, the company lays out upstream raw material supply to improve product quality and reduce procurement costs, and on the other hand, optimizes online and offline user resources, explores customer needs, and broadens product application scenarios to meet increasingly diverse downstream needs.

The core competitiveness of pot ring companies is reflected in a solid upstream supply chain management system, diverse and widely used products, advanced digital systems, and a strong franchisee network. As the largest home-cooked meal and home-cooked hot pot brand in China, Cookin has met consumers' one-stop procurement needs for diverse scenarios through its 710 products. In terms of the supply chain, the company has ensured product quality and service through cooperation with many suppliers in its own factory and the use of the C2F strategy to develop new products. At the same time, more than 10,000 stores and a strong franchisee network support its retail capacity. Ultimately, through the digital management system, the pot ring achieved efficient operation of business processes, thus gaining a significant advantage in the fierce catering supply chain market. In the future, as the supply chain control of the pot ring supply chain continues to be strengthened and the sales network continues to expand, the brand image of pot ring will further improve, leading the home-cooked meal products market.

Profit forecast and investment advice: We expect that in 2024-26, the company will achieve revenue of 700/81/92 billion yuan, a year-on-year increase of 15.5%/14.4%/14.5%, and net profit to mother of 3.16/3.81/460 billion yuan, an increase of 31.94%/20.62%/20.69% year-on-year, and EPS of 0.12/0.14/0.17 yuan respectively.

Corresponding PE is 43/36/29, respectively. We selected similar categories of Haidilao, Sweet Foods, Yasui Foods, and Sanquan Foods as comparable companies for valuation comparisons. We covered them for the first time, and gave the company a “neutral” rating.

Risk warning: Risks such as rising raw material prices, falling short of expectations in gross margin, and falling short of expectations in exhibition stores.