Key points of investment:
Incident: The company released its 2024 quarterly report. According to the company's announcement, the company achieved operating income of 3.482 billion yuan in 2024Q1, an increase of 39.8% over the previous year, and net profit of 664 million yuan, an increase of 33.5% over the previous year. In our 24Q1 performance forecast, we forecast a 30% year-on-year increase in revenue and 35% year-on-year increase in profit. The company's revenue exceeds expectations, and profits are basically in line with expectations.
Investment analysis opinion: Maintain profit forecasts and predict that the company will achieve net profit of 26.8/33.5/4.06 billion from 2024 to 2026, an increase of 31%/25%/21% over the previous year. The latest closing price corresponding to PE was 29/23/19 times, respectively. The company has excellent channel expansion and operation capabilities. Under the company's “comprehensive national development, cultivating the second curve” development plan, the energy drink business market share continues to increase, and a second growth curve represented by “hydrating” has gradually emerged, maintaining a “gain” rating.
Large energy drink products maintained high growth, and the second growth curve showed impressive results. According to the company announcement, 2024Q1 energy drinks/other beverages achieved revenue of 31/377 million respectively, an increase of 30%/257% over the previous year. The energy drink business continued to grow rapidly, mainly due to the nationwide expansion of channels. The share of revenue from other beverages increased from 4.24% last year to 10.84% this year. Among them, Dongpeng Water Replenishment and Dongpeng Celebrity's combined revenue accounted for 6.92%. Looking at regions, the company's Guangdong/East China/Central Hua/Guangxi/Southwest/North China/Direct Operating Division achieved operating income of 9.2/5/5.3/2.9/3.9/43/ 410 million in 2024Q1, up 9.45%/48%/54.5%/1.57%/69%/95.4%/79.9%, respectively. The 24Q1 company's revenue continues to rise. Looking ahead to 24 years, we believe that with the gradual release of the company's single-point sales capacity in early batch outlets, the market outside of Guangdong Province is expected to grow rapidly throughout the year. With the release of new products such as electrolyte water and sugar-free tea, the sales share increases, and the company is already beginning to have the potential for a national platform-based beverage enterprise.
Changes in product structure affect gross profit margins, and the increase in sales expenses is mainly due to increased market cost investment. The 24Q1 company achieved a gross profit margin of 42.76%, a year-on-year decrease of 0.75pct. Depreciation and amortization is expected to increase mainly due to changes in product structure, an increase in the share of other beverages, and the commissioning of new production capacity. The sales expense ratio was 17.12%, an increase of 1.4 pct over the previous year. The main reason is that the company increased its investment in terminal markets such as freezer displays, and the subsequent increase in product distribution rates, and the sales cost ratio is expected to be optimized. The management/R&D cost rate was 2.96%/0.32%, -0.29/-0.09pct, respectively. 2024Q1's net profit margin to mother was 19.07%, -0.88pct year-on-year.
Risk warning: Risk that the size of the energy drink market falls short of expectations; the cost of raw materials has increased dramatically.