The year-on-year revenue/profit ratio for 23 was +17.0%/+123.4%. Profit fell at the center of performance forecasting, and 23 ended steadily. 24Q1 revenue/profit ratio was -15.6%/-27.7%. The decline in revenue and profit was affected by fluctuations in customer orders at the end of fat grafting and increased competition for coffee. The company's operation was mainly stable in 24 years. Looking ahead to the whole year, the company will actively develop new customers to cope with changes in the industry, expand production and improve the layout of the coffee and plant-based industry chains. Oil and fat prices on the cost side have stabilized, and corn starch has declined year on year. We expect a steady improvement in revenue in the future. We expect EPS to be 0.58 yuan and 0.63 yuan respectively in 24-25, corresponding to 23 times PE in 24 years, maintaining the “gain” rating.

Incident: The company released the 2023 annual report and the quarterly report for '24. Revenue/profit/non-return profit for 23 was 2.84 billion/ 260 million/220 million, respectively, +17.0%/+123.4%/+139.6% year-on-year. Profit fell at the center of the performance forecast, and 23 years ended steadily. In 24Q1, realized revenue/profit/net profit without return to mother was 540 million/50 million/40 million, respectively, -15.6%/-27.7%/-20.8% year-on-year. The company's 24Q1 net operating cash flow was 140 million, +480% year-on-year, mainly due to the year-on-year slowdown in raw material procurement this year. In fiscal year 23, the company plans to pay a cash dividend of 0.28 yuan (tax included) per share, with a dividend ratio of 43.3%.

23Q4 revenue/profit year-on-year ratio was -5.6%/-5.8%, and rising rates were pressured by deducting non-net interest rates. 23Q4 The company's revenue/profit/net profit after deducting non-attributable net profit was 7.6/0.5/50 million, respectively, -5.6%/-5.8%/-13.7% year-on-year. Benefiting from the decline in raw material costs such as fats and oils, 23Q4 gross margin was +1.1 pct to 16.6% year on year. Increased investment in Guangxuan and e-commerce and increased depreciation led to an increase in cost rates. Sales/management/R&D/finance cost ratios were +1.6 pct/+0.3 pct/ -0.2 pct year on year, fair value change income was +5.62 million year on year, and 23Q4 achieved a net profit margin of 6.9%. The net profit margin was basically the same year on year, after deducting non-net interest rate of 6.1% year on year and -0.6 pct year on year.

After a steady end to 23 years, the growth rate of Q4 coffee slowed, and plant-based growth continued to be high. Revenue from fat grafting in '23 was 1.93 billion, +10.1% YoY (volume/price ratio +15.8%/-5.0%, tonnage cost -16% YoY). The coffee business generated revenue of 260 million in 23 years, +22.2% year over year (volume/price ratio +40.9%/-13.2%). Plant-based revenue of $110 million in 23 years, +20.8% YoY (volume/price +26.8%/-4.7%). Among them, 23Q4 fat graft powder, coffee, and plant-based were -22.8%/+7.6%/+43.2%, respectively. Q4 was affected by changes in orders from major customers, and the fat graft business continued to grow rapidly. By channel, chain/industrial enterprises/distribution channel revenue in '23 was +6.2%/+49.2%/-0.1%, respectively.

24Q1 revenue fell short of expectations, downward cost investment increased, and net interest rate -1.4% year-on-year. 24Q1 fat graft powder/coffee/plant-based revenue was 3.1/0.4/0.2 billion, respectively, compared to -35.2%/-18.6%/-9.6%. The decline in fat graft powder was affected by last year's high base+order fluctuations from major customers. The coffee business fell short of expectations due to the impact of the pace of preparation and the impact of changes in orders for premium instant coffee. By channel, Q1 chain/industrial enterprise/distribution revenue was -41.5%/-13.1%/+6.3% year-on-year. Benefiting from lower costs of oil, fat, corn starch, etc., Q1 gross margin was +1.1 pct year over year, sales/management expenses ratio was +2.3 pct/+1.2 pct year over year, Q1 net interest rate was -1.4 pct to 8.5% year over year, and after deducting non-net interest rate -0.5 pct to 7.5% year over year.

24-year outlook: Mainly stable, we expect the second curve to drive growth. 1) Fat graft powder: Changes in orders from major customers and increased competition affect short-term pressure. The company actively fills the gap through the development of new customers such as other tea and industry customers. 2) Coffee: Steady expansion of the production of specialty coffee beans/cold-extracted/freeze-dried coffee varieties. Roasted coffee is expected to maintain rapid growth, while increasing the development of coffee chain customers. 3) Plant-based: Diversify oat milk, coconut and other products, increase investment on the marketing side, and comprehensively promote a series of plant-based products. We look forward to a return to growth driven by the company's second curve.

Investment advice: Q1 sales are under pressure, and improvements are expected in 24 years. Q1 The company's revenue/return profit ratio was -15.6%/-27.7%. The decline in revenue and profit was due to fluctuations in customer orders after fat grafting, increased competition in the coffee industry, and the impact of pre-holiday preparation. Looking ahead to the whole year, revenue-side companies are actively developing new customers to deal with the gap, expanding production and improving the layout of the coffee and plant-based industry chain, and actively expanding the product line on the R&D side. Oil and fat prices on the cost side stabilized, and corn starch declined slightly year on year. We expect steady improvement in revenue in the future. We expect EPS to be 0.58 yuan and 0.63 yuan in 24-25, corresponding to 23 times PE in 24 years, maintaining the “gain” rating.

Risk warning: macroeconomic impact, intensification of industry competition, impact of channel changes, risk of large fluctuations in stock prices due to the lifting of the ban on restricted stocks, sharp rise in costs, falling short of expectations, etc.