Incident: Hairong Cold Chain released its 2024 quarterly report. In 2024Q1, the company achieved revenue of 850 million yuan, YoY -4.3%; realized net profit of 110 million yuan, YoY -1.7%. As the company continues to make progress in expanding new customers and increasing its share in the freezer market, the company's revenue is expected to recover.
Q1 revenue declined year-on-year: Looking at Q1 Hairong's sales by major categories: 1) Due to the high domestic base in the same period last year, we judge that the Q1 freezer business is under pressure. 2) With the volume of orders from the company's newly developed refrigerator customers, we analyzed the rapid growth of the Q1 refrigerator business. 3) The company concentrates on the convenience store chain market and vigorously develops dealers. We judge that the Q1 supermarket business has achieved rapid growth. Looking at domestic and foreign sales, we judge that Q1 export revenue continued to grow rapidly, and domestic sales revenue declined year-on-year. We believe that Hairong has a stable position in the freezer and freezer industry, and its revenue is expected to resume rapid growth in the future.
Q1's profitability continued to increase in a single quarter: the Q1 company's net interest rate to mother was 13.5%, +0.4 pct year-on-year. Q1 The company's net profit margin continued to rise. Our analysis was mainly due to improvements in the company's product structure and the rapid growth of overseas business with high gross margins, which led to an increase in overall gross margin. Q1 The company's gross margin was +0.4 pct year over year.
Q1 net operating cash flow decreased year on year: Q1 Company's net operating cash flow in a single quarter was -60 million yuan year on year, mainly due to a decline in sales revenue. Q1 The cash received by the company from sales of goods and provision of labor services was -40 million yuan compared to the same period last year.
Investment advice: Hairong Cold Chain is a leading enterprise in the domestic commercial freezer industry. It has leading product development capabilities, outstanding flexible manufacturing capabilities, and has mastered high-quality global customer resources. We believe that as the number of new customers of the company's refrigerators continues to be released and smart cabinets are launched at an accelerated pace, there is sufficient momentum for long-term growth. We expect EPS to be 1.15/1.28/1.41 yuan from 2024 to 2026, with a target price of 18.33 yuan for 6 months, corresponding to 16X PE in 2024, maintaining a buy-A investment rating.
Risk warning: The price of raw materials has risen sharply, and customer growth falls short of expectations.