Incident: The company released its 2024 quarterly report. Revenue for the first quarter of 2024 was 1,223 million yuan, up 37.00% year on year; net profit to mother was 160 million yuan, up 43.10% year on year; net profit after deducting non-return to mother was 138 million yuan, up 40.09% year on year.
On the revenue side, new products & channels continue to be released, driving high revenue growth. The company's strategy was upgraded to “channel is king, product leadership, and system protection” in 2023. The company's performance in the first quarter of 2024 benefited from the implementation of the strategy. (1) The company promoted sales in seven major categories through the peak sales season for New Year's goods: casual konjac - sesame sauce, flavorings have climbed month-on-month since its launch in October 2023, becoming a sales hit in various channels; in terms of egg snacks, the company's quail eggs continued to grow rapidly year over year, with sales exceeding 100 million yuan in the first quarter; deep-sea snacks, potato snacks, and dried fruit products all performed well. (2) The company's online and offline channels have resonated to jointly help increase revenue: e-commerce channels account for more than 20% of revenue, and the total online sales volume of snack gift boxes exceeded 100 million yuan in the first quarter; snack channels account for more than 20% of revenue, continuing to strengthen the penetration rate of cooperation with leading channel providers.
On the profit side, improvements in production efficiency and sales structure are expected to drive an increase in net interest rates. In the first quarter of 2024, the company's gross margin was 32.10%, down 2.47 pct year on year; sales expenses ratio was 13.00%, down 0.77pct year on year; management expense ratio was 4.23%, down 0.15 pct year on year; R&D expenses ratio was 1.30%, down 1.43 pct year on year; gross sales margin was 19.10%, down 1.70 pct year on year; net profit margin was 13.05%, up 0.56 pct year on year. The company's net interest rate increased year-on-year in the first quarter of 2024. The main reasons are: (1) the company “went one step further upstream” in terms of core products and has now laid out projects such as quail breeding and full potato powder processing to further gain a leading cost advantage under the premise of stable raw material quality; (2) the company continues to accelerate intelligent manufacturing, digital transformation and development. Production efficiency and efficiency have continued to improve in recent years, and lean production results are outstanding.
Channels and new products continue to be released, and the future outlook is positive. In terms of revenue, in the short term, the snack franchise system and e-commerce channels are expected to continue to contribute new volume. In the medium term, the company lays out all channels for new categories, and category focus+brand marketing is expected to drive the development of quantitative distribution channels beyond expectations. The long-term dimension, upstream layout and scale effect ensure that core categories are leading in cost, and there is room for cultivation in all core categories. In terms of profit, the company's core categories are growing simultaneously along with channels, the scale effect is further highlighted, and the company's profit margin is expected to increase further.
Profit forecast: According to the announcement, we expect the company's revenue for 23-25 to be $53.23/66.10/8.073 billion yuan, respectively, and net profit of 6.76/8.60/10.80 billion yuan, respectively. Maintain a “buy” rating.
Risk warning: Channel development falls short of expectations, increased competition, fluctuating raw material prices, food safety incidents.