24Q1 revenue also increased 24.42%, while net profit to mother also increased 259.00%.
The company announced results. In 23, it achieved operating income of 3,747 billion yuan, an increase of 15.37%, a gross profit margin of 26.28%, an increase of 6.49 pcts, and net profit to mother of 233 million yuan, an increase of 120.12%, mainly due to a drop in raw material prices and a significant boost in the profit side of overseas factories. 24Q1 achieved revenue of 878 million yuan, an increase of 24.42%, a gross profit margin of 27.85%, an increase of 3.50 pct, and net profit of 56 million yuan, an increase of 259.00%. This is mainly due to the low base of the company affected by overseas inventory removal in the same period last year, and profit elasticity was high due to multiple boosts in exchange rates, raw materials, and overseas factories this year.
The company plans to distribute profits and plans to distribute a dividend of 2.4 yuan (tax included) for every 10 shares to shareholders.
By region, the gross margin of overseas business increased sharply, and domestic business increased steadily.
Revenue from the overseas business also increased by 12.89% to 2,533 billion yuan in 2012. Overseas business still achieved strong growth through private brand outgoing+overseas factory sales in the context of inventory removal. The gross margin benefited from rising profit margins and falling raw material prices in overseas factories, which increased 7.97 pcts to 25.22% year on year. Driven by domestic brands, revenue also increased 20.15% to 1,081 billion yuan, and gross margin increased by 3.51 pct to 31.28%. Mainly due to the continuous upgrading of its own brands, playfully launching single products such as staple food cans, raw bone and meat double food compartments, etc., and the full line upgrade of zeal's large single product, the air-dried series and freeze-dried series, leading the bakery and staple food cans to achieve breakthroughs from 0 to 1.
According to Magic Mirror data, the three 24Q1 playful/zeal/ leading online platforms increased by -16.40%/22.65%/61.60%, respectively. The company's caliber increased by 0.77% and basically stabilized. Driven by leading large single products, it is expected that Naughty will release new momentum after the brand adjustment is completed.
By product, staple food revenue and gross margin both achieved high growth.
In '23, revenue from staple foods/canned foods/snacks reached 577/6.35/ 2.351 billion yuan, up 60.23%/5.76%/9.81%. Continued release of private brand staple foods led to high revenue growth in the staple food business. The gross margins of the three major sectors were 29.06%/32.62%/25.39%, respectively, up 8.61/6.21/6.82pct.
Continued brand promotion, sales expenses increased.
The company has long been optimistic about its own brand business and is committed to brand promotion. The sales expenses ratio for '23 and 24Q1 was 10.33%/10.38%, respectively, an increase of 1.00/0.71 pct. The R&D cost rate for the year 23/24Q1 was 1.28%/1.68%. As of March 1, 2024, the company had obtained 267 national patents.
The 23/24Q1 management expenses rate was 3.83%/5.10%, and the R&D expenses ratio was 1.28%/1.68%, respectively.
Profit forecasting and investment advice
The company has formed a two-legged approach of overseas OEM and its own brand. Due to the company's outstanding revenue and profit performance, we have adjusted our profit forecast. The company's revenue for 2024-2026 is 45.43/53.44/6.245 billion yuan (previous value of 44.32/5.261 billion yuan in 24-25 years), and adjusted net profit to mother to 3.09/3.62/433 million yuan (previous value 24-25 was 297/379 million yuan). The company was given 33 times PE in 2024, corresponding to a target price of 34.64 yuan/share, maintaining the company's “buy” rating.
Risk warning
Product competition risk, raw material price fluctuation risk, exchange rate fluctuation risk, and risk of poor performance adversely affecting the company's valuation premium