Brief performance review
On April 25, the company released its quarterly report. In 24Q1, it achieved revenue of 853 million yuan, +11.34% year over year; realized net profit of 176 million yuan, +37.20% year over year; deducted non-net profit of 147 million yuan, +23.47% year over year.
Management analysis
The hot pot base is still under pressure, and Little B food extract performs well. 1) On the product side, 24Q1 hot pot condiment/ Chinese dishes/ sausage and bacon materials/ others achieved revenue of 2.93/4.95/0.33/30 billion yuan respectively, compared with the same period last year
+1.18%/+17.75%/+21.81%/+11.50%. Seasonings in Chinese cuisine grew relatively well, and continued to increase mainly after the merger of small B foods. 2) On the channel side, 24Q1 online/offline channels achieved revenue of 132/719 million yuan respectively, +101.23%/+2.94% year-on-year. The online growth rate has improved markedly. Food extracts and supplements the online small to medium B customer channels, and the scope of services has also expanded from a single store to a large restaurant chain. As of 24Q1, the company had 3183 dealers, an increase of 18 over the previous year.
Cost reduction+product structure optimization+increased return on investment, and Q1 net interest rate improved significantly. The 24Q1 net margin was 20.90%, +4.22pct year-on-year. 1) The gross margin of the 24Q1 company was 44.05%, +3.43pct year-on-year, mainly due to a decrease in the price of oil and fat raw materials and an increase in the share of high-margin products. 2) As costs continue to decline in 24 years, smart factory capacity utilization rates have increased, and gross margin is expected to continue to improve. 3) On the cost side, the company's sales/management/R&D/finance rates in 24Q1 were 17.02%/5.07%/-0.27%/1.05%, respectively, compared with the previous year, +2.18/-0.83/+0.07/-0.06pct. The significant increase in sales rates was due to an increase in promotional giveaways during the Spring Festival peak season. 4) In terms of investment income, 24Q1/23Q1 was 3438/12.67 million yuan respectively, an increase of 171% over the previous year.
Optimize the product matrix, promote omni-channel layout, and be optimistic that the company will achieve its performance goals. The company insists on deepening the construction of the C-end online and offline channel system and strengthening the further exploration of B-side channels. At the same time, through the existing superior distribution system, the company empowers both ends B and C to achieve multi-faceted omni-channel and multi-scenario access. On the product side, the company will accelerate research and development of new products on the basis of consolidating the market share of major core products, create specialized and differentiated compound condiments for segmented and diversified consumer needs, and is optimistic that the company will successfully achieve its annual performance goals.
Profit Forecasts, Valuations, and Ratings
The company's net profit for 24-26 is estimated to be 56/ 6.6/770 million yuan respectively, up 22%/19%/16% year-on-year respectively, and corresponding PE is 24/20/17x, maintaining a “buy” rating.
Risk warning
Risks such as food safety risks; new product releases falling short of expectations; increased market competition.