Incident: The company released its 2024 quarterly report. In the first quarter, it achieved operating income of 3.48 billion yuan, an increase of 39.8% over the previous year, and realized net profit of 660 million yuan, an increase of 33.5% over the previous year.
Product and regional revenue structures were optimized, and new products were further expanded. 1. By category, Dongpeng Drink and other beverages achieved revenue of 3.1 billion yuan (+30.1%) and 380 million yuan (+257%) respectively in the first quarter, accounting for 89.2% and 10.8% of revenue, respectively. Of these, the total revenue of Rehydration and Dongpeng Big Tea accounted for 6.9%, and new products were further released. 2. Looking at the subregion, the Guangdong region, national marketing headquarters, and direct management division achieved revenue of 920 million yuan (+9.4%), 2.14 billion yuan (+51.2%), and 410 million yuan (+79.9%) in the first quarter. Among them, North China, Southwest China, and central China led the growth rate, and the nationwide layout continued to advance.
Profitability declined in the short term. 1. The gross profit margin for the first quarter was 42.8%, down 0.8 pp year on year, mainly due to the impact of product structure. 2. The sales expense ratio was 17.1%, an increase of 1.4pp over the previous year, mainly due to increased freezer investment. The management cost ratio was 2.9%, down 0.3 pp; the R&D expense ratio was 0.3%, which was basically the same; the financial cost ratio was -1.3%, down 1.1 pp year on year. Furthermore, investment income fell by 100 million yuan in the first quarter, which dragged down net interest rates. 3. Net profit margin 19.1%, down 0.9pp year on year.
Product diversification+nationalization of operations, sufficient growth momentum. The company plans to grow revenue and net profit by no less than 20% in 2024. 1. In terms of new products, new products such as hydrating, electrolyte drinks, sugar-free tea, coffee, and pre-mixed spirits were launched in an orderly manner, gradually becoming a comprehensive beverage group. 2. The company will continue to deepen its national layout. It already has nine major production bases: Zengcheng base, South China base, Dongguan base, Anhui base, Nanning base, Chongqing base, Haifeng base, Quzhou base, and Changsha base. Construction of the Tianjin base has started successfully, and production and marketing coordination capabilities are constantly improving.
Profit forecasting and investment advice. The estimated net profit for 2024-2026 will be 2.66 billion yuan, 3.32 billion yuan, and 4.07 billion yuan, respectively, and EPS will be 6.65 yuan, 8.30 yuan, and 10.19 yuan respectively. The corresponding dynamic PE is 29 times, 24 times, and 19 times, respectively, maintaining the “buy” rating.
Risk warning: Nationalization falls short of expectations; raw material prices fluctuate greatly; food safety and other risks.