Incident: Baiya Co., Ltd. released its 2023 annual report and 2024 quarterly report. In 2023, the company achieved operating income of 2.144 billion yuan, a year-on-year increase of 33.00%; net profit to mother was 238 million yuan, an increase of 27.21%; net profit after deducting net income of 216 million yuan, an increase of 20.33% over the previous year.
Among them, 23Q4 achieved operating income of 668 million yuan, a year-on-year increase of 38.39%; net profit to mother was 56 million yuan, a year-on-year decrease of 8.65%; and net profit after deduction of 44 million yuan, a year-on-year decrease of 25.19%. 24Q1 achieved operating income of 765 million yuan, an increase of 46.40% year on year; net profit to mother was 103 million yuan, up 28.07% year on year; net profit after deduction was 98 million yuan, up 30.63% year on year.
Big Health explosives are driving a continued high increase in freedom points. Looking at online and peripheral provinces at an accelerated pace of development by channel, 1) E-commerce channel revenue grew at an accelerated pace in 24Q1, up 150.5% to 300 million yuan over the previous year. The company's investment in resources on the brand side and the scale potential of the Douyin platform began to accelerate. The spillover effect was reflected in other platforms while continuously iterating and upgrading the organizational style of different e-commerce platforms. The sales share of each platform increased smoothly. Douyin, Tmall, and Pinduoduo accounted for about 50%, 20%, and 10% respectively in 24Q1, and the growth rate was over 100%. 2) 24Q1 offline channel revenue was 436 million yuan, up 16.7% year on year. Among them, the growth rate of distribution channels and KA channels was close, and provinces outside the core region increased 52.0% year on year. While maintaining the advantage of being deeply involved in the core markets of Sichuan, Chongqing, Yungui and Shaanxi, the company is speeding up the expansion of key peripheral regions, focusing on markets in Guangdong, Hunan, Hebei and other provinces.
In terms of products, the sales share of explosive probiotic products has continued to grow since their launch in mid-'23. 24Q1 Company's Free Point Sanitary Napkins achieved revenue of about 700 million yuan, an increase of 54.6% over the previous year. Among them, DaHealth's mid-range and high-end products are still the main driving force for growth. The company will upgrade and iterate the core explosive probiotic product line to expand the advantages of probiotic products.
In addition, the company's production capacity was tight during the peak of the 38th promotion season on 24Q1, and stable supply has now been restored at the end of the event. The company has already made preliminary plans for the second phase of the plant. In order to cope with production and supply in the second half of the year, especially for Double 11 this year and March 8 next year, the company is considering various solutions, such as continuing to supplement production lines and possibly continuing to purchase production lines in the future, leasing other factories as a transition, and increasing the share of outsourced procurement of ordinary products. The impact of tight supply is expected to ease.
24Q1 Product structure continues to be optimized, and investment in brand building is increasing
In terms of profitability, the company's gross margin in 2023 was 50.32%, up 5.21pct year on year; 23Q4 gross margin was 53.20%, up 6.24pct year on year. The gross margin of Liberty Point products in '23 was 54.8%, up 3.6% year on year. This is mainly due to the rapid increase in revenue share of high-end products in mid-'23, and the Big Health series revenue accounted for 26.1% of sanitary napkins. 24Q1 gross margin was 54.36%, up 7.51pct year over year. The year-on-year increase in the share of the 24Q1 Big Health midrange and high-end series products led to an increase in gross margin.
In terms of period expenses, the company's expenses rate for the 23-year period was 36.88%, up 6.07pct; sales/management/R&D/finance expenses were 31.20%/3.36%/2.52%/-0.21%, respectively, and +6.70pct/-0.48pct/-0.17pct/-0.02pct, respectively. The cost rate for the 24Q1 period was 38.99%, up 9.84pct year on year; sales/management/R&D/finance expenses were 34.42%/1.99%/-0.14%, respectively, +11.59pct/-1.18pct/-0.49pct/-0.08pct, respectively. 24Q1's sales expenses were 263 million yuan, an increase of 120.7% over the previous year, mainly due to the company's brand promotion expenses and the increase in e-commerce platform investment expenses. The company will continue to increase investment in brand building, increase marketing and brand promotion efforts, and continue to enhance brand influence and expand the consumer base.
Under the combined influence, the company's net interest rate in '23 was 11.12%, down 0.47pct year on year; 23Q4 net interest rate was 8.36%, down 4.27pct year on year; 24Q1 net interest rate was 13.41%, down 1.97pct year on year.
Investment advice: Baiya Co., Ltd. has been deeply involved in the field of personal care for many years. It continues to promote product structure optimization, rapid channel and regional expansion, and invigorate new e-commerce channels. It is expected that its market share will continue to increase in the future. We expect the 2024-2026 operating income of Baiya Co., Ltd. to be 28.60, 36.29, 4.548 billion yuan, up 33.38%, 26.88%, and 25.35%; net profit to mother will be 3.19, 4.12, and 529 million yuan, up 34.06%, 29.03%, and 28.39%. Corresponding PE is 28.41x, 22.02x, 17.15x, and the target price is 24.25 yuan, maintaining the buy-A investment rating.
Risk warning: Market competition is increasing risk; risk of large fluctuations in raw material prices; risk of new channels and regional expansion falling short of expectations.