Event: The company released its 2024 quarterly report. 24Q1 achieved operating income of 551 million yuan, an increase of 6.61% year on year, and realized net profit of 82 million yuan to mother, a year-on-year decrease of 3.74%.
Revenue growth is in line with expectations. High growth in coconut juice continues, yellow peaches are under pressure from a high base, and the product structure has been further improved. The 24Q1 company achieved revenue of 551 million yuan, an increase of 6.61% over the previous year. By product, 24Q1 beverage product revenue was 311 million yuan, accounting for 56.49% of sales, up 23.47% year on year. Among them, revenue from coconut drink products was 267 million yuan, up 25.96% year on year. We judge that coconut juice continued its rapid growth trend for 23 years, mainly due to the continuous promotion of channel expansion. Coconut juice as a growth product is the company's main driving direction; canned product revenue was 220 million yuan, accounting for 39.84% of sales, down 15.86% year on year. Among them, revenue from canned yellow peaches was 89 million yuan, down 15.86% year on year. At 31.91%, revenue from canned oranges was 62 million yuan, up 5.29% year on year. The year-on-year decline in canned yellow peaches was affected by the high base brought about by the canned yellow peach boom in the same period in '23. In fact, regardless of the impact of the canned yellow peach boom, revenue from canned yellow peaches in 24Q1 increased by about 119% compared to 22Q1.
Gross margin was improved due to product structure and cost-side benefits, sales expenses remained high to drive the expansion of outlets, and profitability was under slight pressure in the short term.
The 24Q1 company achieved net profit of 82 million yuan, down 3.74% year on year, gross margin/net margin of 38.70%/14.90%, respectively, +1.84/-1.60 pct year on year, respectively. The gross margin has increased significantly. Our judgment is mainly due to: 1) The company's product structure improvement: Among the main products, the gross margin of coconut juice was about 15 pcts higher than canned fruit in '23, and the share of 24Q1 beverages in revenue increased from 48.78% to 7.71pct to 56.49%. The product structure improvement led to an increase in gross margin; 2) The price of fruit raw materials has declined: due to the good harvest of oranges at the end of '23, we expect the purchase price of oranges to drop significantly.
24Q1 sales/management/finance/R&D expense rates were 12.95%/5.31%/-0.10%/0.18%, +3.87/+0.36/+0.32/+0.12pct, respectively. In absolute terms, the 24Q1 company's sales expenses increased 52% year on year, but fell 7% from month to month. We determined that sales expenses increased significantly year over year: 1) Under the 23Q1 canned yellow peach boom, product sales exceeded expectations, and company expenses were relatively low; 2) As the company strived to achieve the goal of 1 million terminal outlets in '24, the company increased the development and maintenance of personnel in the terminal market through traditional channels.
Looking ahead to 24Q2-Q4, coconut juice is expected to increase from traditional channels, the pressure on canned food is no longer there, and new products are expected to be released on a quarterly basis. 1) In terms of traditional products, with the company's focus on expanding its network and channel layout and continuous regional expansion, traditional coconut juice is expected to grow rapidly as the main product. Canned fruit will basically escape high base pressure in the future, and is expected to grow steadily. In addition, 24Q1 has entered some major snack franchise chain channels with canned yellow peaches and canned orange products, showing a trend of increasing month by month, and is promoting beverage products into this channel one after another, which is expected to contribute new volume every quarter. 2) In terms of new products, the company actively lays out the Coconut Shark Coconut Water series products, increases brand promotion efforts, and lays out the summer ready-to-drink market ahead of schedule through online and offline multi-channel collaborative development. In addition, the company has initially formed a multi-channel raw material supply system, and has also carried out preliminary business contacts in raw material sales and other businesses.
Profit forecast: We believe that the company's goal for 24 years is positive, striving to achieve one million terminal outlets by the end of the year, the basic traditional business market is stable, new products and channels are expected to gradually start up, and the annual performance is flexible.
We expect that in 2024-2026, the company will achieve operating income of 22.24/25.47/2,877 billion yuan, a year-on-year increase of 16%/15%/13%, a year-on-year increase of 18%/17%/17%, EPS of 0.74/0.86/1.01 yuan/share, and corresponding PE of 20X/17X/15X, maintaining the “recommended” rating.
Risk warning: Food safety issues, risk of raw material price fluctuations, new product expansion falls short of expectations, channel development falls short of expectations, and production capacity investment falls short of expectations.