Incident: Jinzai Foods released its 2024 quarterly report. In 24Q1, it achieved operating income of 540 million yuan, up 23.58% year on year; net profit to mother was 74 million yuan, up 87.73% year on year; net profit after deducting non-return to mother was 58 million yuan, up 77.45% year on year. Revenue performance fell short of market expectations.
Actively adjust and explore upgrades. Taking into account the impact of the Spring Festival misschedule, the 23Q4+24Q1 company achieved a total operating income of 1,112 billion yuan, +25.07% year-on-year; net profit to mother was 150 million yuan, an increase of 104.01% over the previous year.
Online channel companies take the initiative to control prices and distribute expenses, and offline channels are growing well. Reviewing Jinzai's growth process is also a channel-side upgrade process. The company developed from a single traditional channel in the past to modern channels, while also expanding online channels and snack mass sales channels, etc., and gradually realized a multi-channel layout. In the process of channel development, Jinzai uses the expansion of product regulations and categories as an important starting point to provide suitable price bands, channel profits and display surfaces for new channels, and enhance channel competitiveness on the basis of product strength. Among them, the high degree of adaptation of new types of quail eggs and distribution channels helped the company speed up the process from quantitative product regulation to loose product regulation layout. There are differences in consumption scenarios, value chains, etc. between different channels. In the process of channel upgrading, companies need to work together to raise category awareness, open up the category ceiling, and thus provide more sufficient profit margin for new channel expansion. Therefore, in terms of product and brand upgrades, Jinzai promoted the layout of high-end deep-sea anchovies, shifting consumer perception from relatively low price spicy and halved snacks to fish snacks with more space; adhering to the quality of quail eggs, stabilizing the terminal price market, and maintaining a leading edge in terms of individual product volume. 24Q1 The company's active adjustment of online channels is also aimed at stabilizing the overall price market and adapting to the company's overall strategy on the channel side.
Cost reduction increases gross profit margin, and profitability performance is good. In terms of gross margin, the 24Q1 company's gross margin was 30.02%, +4.04pcts year-on-year, and -2.60pcts month-on-month. The purchase price of mainly fish products has declined, and the price of quail eggs is relatively low (the average price of quail eggs for the full year of 2023/23Q4/24Q1 was 5.98/5.31/5.30 yuan/kg, respectively). Cost pressure has eased, and gross margin has improved year-on-year. On the cost side, the 24Q1 company's sales expense ratio was 13.12%, +1.24pcts year over year and +4.14pcts month-on-month. Mainly due to an increase in terminal expenses. The management fee rate was 3.88%, +0.02pcts year-on-year, and -0.82pcts month-on-month.
Taken together, the 24Q1 company's net interest rate to mother was 13.63%, +4.66pcts year-on-year, and +0.27pcts month-on-month.
The net interest rate after deduction was 10.82%, +3.28 pcts year on year and -2.65 pcts month on month. The company's profit level increased. Looking ahead to the whole year, the price of dried anchovies 23H2 as the core raw material has declined somewhat during the new purchase season. The company has been reserving the usage amount for about half a year, and the cost of 24H1 anchovies is expected to be relatively stable. The price of raw materials for quail eggs is currently low. Pay attention to subsequent changes in the price trend of quail eggs.
Profit forecast, valuation and rating: We maintain the 2024-2026 EPS of 0.61/0.78/0.95 yuan, respectively, and the current stock price corresponds to P/E of 25/20/16 times, respectively. The company's product strategy is clear, the multi-channel expansion is smooth, and the “buy” rating is maintained.
Risk warning: fluctuating raw material costs; modern channel expansion falls short of expectations; food safety risks.