Key points of investment:
The inflection point of performance has been reached. 24Q1 revenue also increased by 142.37%, and net profit to mother increased by 209.56%.
The company announced results. In 23, it achieved operating income of 1,411 billion yuan, a decrease of 18.51%, a gross profit margin of 19.33%, a decrease of 2.97 pct, and net profit to mother of -11 million yuan, turning negative. 24Q1 achieved revenue of 384 million yuan, an increase of 142.37% (+11.95% compared with the same period in '22), a gross profit margin of 24.36%, an increase of 10.32pct (-0.03pct compared with the same period in '22), and net profit of $42 million, an increase of 209.56% (+46.09% compared with the same period in '22). Order recovery and exchange rates were favorable, and the performance was outstanding. The company announced that the 4.5936 million shares repurchased will be changed to cancellation and reduction of the use of registered capital.
Domestic business performed well, and overseas business ushered in an inflection point
In '23, the country achieved revenue of 350 million yuan, an increase of 26.95%, a gross profit margin of 23.68%, and an increase of 0.11pct. The company exploited the brand through large single products, rapidly raised brand revenue and profit levels through category expansion, and completed the qualitative transformation of the brand from 0 to 1. Currently, the competitiveness of its own brands continues to improve. According to online data, the three online platforms of Jueying increased by 64.86%/27.60% respectively in '23/24Q1, and the company's caliber increased by 34.17%/13.97%, respectively. This year, its own brands will further strengthen its staple food business. Jueyan is expected to launch high-end staple food categories such as dried foods. It is hoped that the volume of staple foods will drive the revenue and market share of its own brands to further increase. Due to overseas inventory removal in '23, overseas revenue also decreased by 27.10% to 1,062 billion yuan. The profit side was due to insufficient capacity utilization, and gross margin fell 4.16 pct to 17.90%. Currently, customers are shifting from inventory removal to inventory replenishment cycle, and export orders have returned to normal, and we are looking forward to subsequent performance.
By product, staple food revenue and gross margin both achieved high growth.
Revenue from staple foods and wet food/nutritious meat snacks/vegetable chewing/animal skin chewing gum reached RMB 2.10/3.18/4.23/ 424 million yuan respectively, up 31.33%/-5.72%/-34.84%/-22.11%. The staple food business grew rapidly, with a gross margin of 20.05%/18.69%/24.42%/15.04%. We expect the launch of the New Zealand factory, the expansion of the Cambodian factory, and the growth of our own brand to drive growth in the staple food and chewing gum business.
Fee control management is good, and the cost rate is stable
The 23 year/24Q1 sales expense ratio was 7.24%/4.64%, with an increase of 2.24/6.07pct, and the company continued to promote the brand; the management expenses rate was 7.85%/6.34%, respectively, and the management expenses decreased by 11.50% in 23 years after excluding share payments and amortization; the financial expenses ratio was 0.29%/-0.61%, favorable exchange; the R&D expense ratio was 2.06%/1.25%, and the R&D expenses were firmly invested in R&D. The company's cost control management is excellent.
Profit forecasting and investment advice
The company's performance recovery exceeded expectations. We increased the company's 24-26 revenue to 2.09/22.26/2,457 billion yuan (the previous value was 1,875/2,253 million yuan in 24-25 years) and increased net profit to mother to 1.48/1.61/200 million yuan (previous value of 1.37/159 million yuan in 24-25). Maintain the company's PE 28 times in 2024, corresponding to a target price of 16.30 yuan/share, and maintain the company's “buy” rating.
Risk warning
Overseas market recovery fell short of expectations, production capacity could not absorb anticipated risks, market competition intensified, raw material prices fluctuated, and the risk of exchange rate fluctuations.