Event: The company announced its 2023 annual report and 2024 quarterly report. The company achieved a total operating income of 3,747 billion yuan, yoy 15.37%, and realized net profit of 233 million yuan, yoy 120.12%; in the first quarter of 2024, a total revenue of 888 million yuan, yoy 24.42%, realized net profit of 56 million yuan, yoy 259%.
Overseas business resumed growth, and profitability improved markedly. The company achieved steady growth in revenue and rapid growth in performance throughout '23. The company's overseas business achieved revenue of 2,662 billion yuan, an increase of 13.44% over the previous year. As customers finished inventory removal, the company's export business returned to normal. In terms of profitability, the company's overseas gross profit margin was 25.22% in '23, a sharp increase of 7.97 percentage points over the previous year, mainly due to improvements in the price of chicken raw materials in the US, optimization of the company's product structure, and the positive impact of exchange. The 24Q1 company's performance remained high. On the one hand, due to the low base for the same period last year, and on the other hand, the company's profitability improved markedly. 24Q1's gross sales margin and net profit margin were 27.85% and 7.41% respectively, up 3.5 and 3.58 percentage points, respectively. The company's profitability is expected to continue to rise steadily through measures such as optimizing the product structure, improving supply chain efficiency, and strengthening cost control.
The adjustments of our own brands have been sorted out, and we look forward to seeing the results of the adjustments. In 2023, the company's domestic business achieved revenue of 1,086 billion yuan, an increase of 20.40% over the previous year. By product, pet staple food, pet snacks, and canned pet food achieved revenue of 577 million yuan, 23.51 million yuan, and 635 million yuan respectively, with year-on-year increases of 60.23%, 9.81% and 5.76%, respectively. The company's staple food products are mainly sold in the domestic market, and revenue continues to rise high. In terms of profitability, the company's domestic gross margin in '23 was 31.28%, an increase of 3.51 percentage points over the previous year. During the reporting period, the company actively adjusted the product layout, stabilized the price market, adjusted low-margin products and long-tail SKUs, differentiated the layout of online and offline SKUs, and promoted higher gross margin. We judge that the sorting and adjustment of our own brands had a certain impact on the company's domestic revenue growth rate in '23. Once the adjustments are gradually completed, the sales growth rate and profitability of the company's own brands are expected to reach another level.
Company profit forecast and investment rating: We are optimistic that the company's overseas market business will return to steady growth, and we are optimistic about the company's brand adjustment ideas and subsequent results in the domestic market. The company's net profit for 2024-2026 is estimated to be RMB 2.88, 3.47 and RMB 419 million, EPS of 0.98, 1.18 and 1.42 yuan, and PE of 26, 21 and 18 times, maintaining the “Highly Recommended” rating.
Risk warning: Domestic market expansion falls short of expectations, risk of fluctuations in raw material prices, risk of exchange rate fluctuations, etc.