Incidents:
Jiajiayue released its 2023 annual report and 2024 quarterly report. In 2023, the company achieved revenue of 17.763 billion yuan/ -2.31%, net profit of 136 million yuan/ +127.04%, net profit after deducting non-return to mother of 99 million yuan/ +275.56%, and non-recurring profit and loss of 38 million yuan, mainly from government subsidies. It plans to distribute a discovery dividend of 1.9 yuan (tax included) for every 10 shares in 2023. 2023Q4 achieved revenue of 38.84 billion yuan/ -7.99%, net profit attributable to mother - 72 million yuan/loss reduction, net profit not attributable to mother - 93 million yuan/loss reduction.
2024Q1 achieved revenue of 5.189 billion yuan/ +5.73%, net profit of 147 million yuan/ +7.10%, net profit of 136 million yuan/ +1.05% after deducting non-return to mother net profit.
Comment:
Revenue declined slightly throughout the year, and Shandong was deeply cultivated and gradually expanded outside the province. In 2023, the company's revenue was 17.763 billion yuan/ -2.31%, by product: 1) Food washing revenue of 8.687 million/accounting for 48.91%/+2.46%; 2) fresh revenue of 7.049 billion/ accounting for 36.69%/-7.49%; 3) department store revenue of 616 million/accounting for 3.47%/-1.16%; 4) industrial and other revenue of 111 million/accounting for 0.63%/-24.88%; 5) other business revenue of 1,299 million/accounting for 7.31%/-1.08%. Looking at the main business by region: 1) Shandong Province's revenue is 13.626 billion/ accounting for 76.71%/-3.45%; 2) Revenue from outside the province is 2,727 billion/ accounting for 15.35%/+4.49%. The number of company stores grew steadily, fresh food and rural supermarket performance were under pressure, and overall revenue declined slightly.
Improving quality and efficiency continues to advance, and the cost ratio performance is steady. In 2023, the company's expense ratio was 22.40% /+0.15pct, of which: 1) sales expenses of 3.348 billion yuan/ -1.30%, sales expenses rate 18.85% /+0.19pct; 2) management expenses of 376 million yuan/ +1.24%, management expense ratio 2.12% /+0.07pct, 3) R&D expenses of 0.13 million yuan, R&D expenses rate 0.07% /+0.07pct, mainly to improve operational efficiency and labor costs for new business development and innovation; 4) financial expenses of 242 million/ -14.57%, financial expense ratio 1.36% /-0.20pct, which is a decrease in store rental interest and bank financing costs.
Investment advice: The market penetration rate of the company's traditional business format is growing steadily. Combined with an efficient logistics distribution and supply chain system, operational efficiency has improved markedly, and the layout of new business formats such as discounts is smooth, which is expected to bring about a new growth curve. Considering that the company's new business format is still in the layout stage and the profit forecast is adjusted, revenue for 2024-2026 is estimated to be 18.961 billion/ 19.823 billion/ 20.594 billion, respectively, and net profit to mother will be 238 million/262 million/316 million, respectively. The corresponding PE is 28 times/25 times/21 times, respectively. Maintain an “Overweight” rating.
Risk warning: Market competition intensifies; store expansion falls short of expectations; performance of new business formats falls short of expectations; performance forecasts and valuation judgments fall short of expectations.