Incidents:
The company released its 2024 quarterly report. 2024Q1 achieved operating income of 3.482 billion yuan, a year-on-year increase of 39.80%; net profit to mother of 664 million yuan, an increase of 33.51%; and deducted non-net profit of 624 million yuan, an increase of 37.76% year-on-year.
New products continue to climb the slope and promote national expansion
By product, sales of new products such as the 500ml Gold Bottle and Dongpeng Rehydrator continued to rise. The main business, Middle East Pengte Drink's 2024Q1 revenue was 3.101 billion yuan, up 30.11% year on year, and revenue from other beverages was 377 million yuan, up 257.01% year on year. The revenue share continued to increase, reaching 10.84%, and the construction of a pan-beverage category platform progressed steadily. Looking at the subregion, the company continues to focus on Guangdong and actively explore the national market. 2024Q1 Guangdong regional/national regional/direct management division achieved revenue of 9.21/21.43/413 billion yuan, up 9.45%/51.21%/79.87% year-on-year respectively. By the end of 2024Q1, the company had a total of 2,912 dealers.
Freezer installation increased expenses, and the 2024Q1 company plans to invest in the construction of a new production base to achieve gross margin/sales expenses rate/management expense rate/R&D expense rate/financial cost rate/0.32%/-1.29%/19.07%, compared to -0.76/+1.42/-0.30/-0.10/-1.05/-0.89pct, respectively. The overall slight increase in the cost ratio is mainly due to an increase in investment in frozen displays. We expect that as the scale of revenue continues to grow, the investment ratio of fixed costs is expected to be diluted, and profitability is expected to remain steady. The company plans to establish a new Zhongshan production base project in Zhongshan, with a cumulative total investment of about 2.5 billion yuan, of which the total fixed asset investment of the Zhongshan production base is not less than 1.08 billion yuan, and the investment intensity is not less than 6 million yuan/mu. The project is not expected to have a significant impact on the company's business performance in 2024-2025.
Profit Forecasts, Valuations, and Ratings
We expect the company's revenue for 2024-2026 to be 141.95/174.25/21.136 billion yuan, respectively, with year-on-year growth rates of 26.04%/22.75%/21.29%, net profit to mother of 26.31/32.67/4.014 billion yuan, year-on-year growth rates of 28.99%/24.17%/22.85%, EPS 6.58/8.17/10.03 yuan/share, respectively, and a 3-year CAGR of 25.31%. In view of the outstanding performance of the company's second curve, we promoted the company's transformation from an energy drink leader to a pan-drink platform. Referring to comparable company valuations, we gave the company 35 times PE in 2024, with a target price of 230.21 yuan, maintaining a “buy” rating.
Risk warning: raw material prices fluctuate; new product promotion falls short of expectations; changes in market competition pattern