Adhering to the nationwide business layout, 2024Q1 deducted significant growth in non-net profit. The company released its 2023 annual report and 2024 quarterly report. In 2023, it achieved revenue of 1.63 billion yuan, +6.9% year on year; net profit to mother was 210 million yuan, -4.0% year on year. 2024Q1 achieved revenue of 350 million yuan, +10.7% year on year; net profit to mother of 40 million yuan, -3.4% year on year; deducted non-net profit of 40 million yuan, +87.1% year over year. In 2023, the company accelerated store expansion and strengthened the group meal business outside of East China to achieve steady revenue growth. In the first quarter of 2024, the continued recovery of the group meal business and the steady growth of the store business led to a steady increase in the company's revenue. Combined with the reduction in sales expenses and management expenses, the company's net profit deducted increased dramatically. Considering the weak recovery in consumption, we lowered our 2024-2025 profit forecast and added the 2026 profit forecast. We expect net profit to be 2.49 (-0.03) /2.95 (-0.10) /330 billion yuan respectively for 2024-2026, corresponding to EPS of 0.99 (-0.02) /1.18 (-0.04) /1.32 yuan, respectively. The current stock price corresponding to 2024-2026 PE is 16.4/13.9/12.4 times, respectively, and optimistic about the two-wheel drive for stores and group meals, respectively. Maintain a “buy” rating.
The opening performance of the South China store was outstanding, and the group meal business picked up significantly
In terms of store business, the company is steadily developing offline franchise stores. 2024Q1 East China/South China/Central China/North China respectively added a net increase of 3/53/0/-5 stores. Among them, the rapid growth in South China mainly contributed to the Hunan market; it continued to optimize the single-store model by enriching the product matrix and expanding the Chinese dinner consumption scenario, and ultimately driving the franchise business revenue ratio +8.3% to 260 million yuan. In terms of the group meal business, the company reached cooperation with large group meal customers such as Da Runfa to actively explore celebrity live streaming and community group purchase channels, and launched 11 pre-prepared food products by the end of 2023, which ultimately increased 2024Q1 group meal revenue by +20.9% year-on-year to 80 million yuan.
Capacity expansion supports the “store+group meal” two-wheel drive, and industry mergers and acquisitions help optimize the market layout and look forward to the future. With the official launch of production capacity in Dongguan and Wuhan in 2024 and the release of production capacity in the Shanghai factory in the second half of 2025, the company's store business will strive to expand more than 1,000 new stores in 2024, and optimize the single-store model by continuing to launch new products and finely manage stores; the group meal business will continue to promote the development of the prepared food business, focusing on new retail platforms and overseas business, and strive to achieve further growth in 2024, sales outside of East China The share continues to rise. In addition, the company has acquired 51% of Nanjing's dominant breakfast brand “Steamed Whole Flavors” and will combine them in 2024Q2, which is expected to further increase the company's market share in East China.
Risk warning: store expansion, production capacity falling short of expectations, sharp rise in raw material prices, etc.