Key points of investment:
The company announced its 2024 quarterly report, and the results were in line with expectations. According to the company's announcement, 24Q1 achieved operating income of 1,012 billion yuan, a year-on-year increase of 10.04%, an increase of 90.09% over the previous year, and realized net profit of 171 million yuan, an increase of 2.22% over the previous year and a year-on-year increase of 55.54% over 2019.
The food business is growing steadily, and the restaurant business continues to grow, optimizing the dealer network and improving supply chain efficiency. According to the company's announcement, mooncake series products/ frozen food/ other products and products achieved revenue of 9.03/295.1/299.3 million yuan respectively in the first quarter of '24, or -20.09%/-4.10%/+27.56%, respectively. The company continued to adjust and optimize its distribution network and deepen its supply chain advantages. 24Q1 direct sales/distribution achieved revenue of 192.8/410.6 million yuan, respectively, an increase of 8.95%/9.01% year-on-year. Single Q1 optimization reduced the number of dealers by 42, including net changes of -15/-28/+1 within Guangdong Province/overseas, respectively, for a total of 559/445/26, streamlining the domestic product sales network. The 24Q1 catering business achieved revenue of 38.38 million yuan, an increase of 13.33% over the previous year.
Consolidate the advantages within the province, promote the layout outside the province, and promote the integrated development of seasonal “food+catering”. According to the company's announcement, Guangdong Province is focusing on the layout of empty outlets in advantageous regions, and business expansion outside the province is expected to anchor the establishment of new stores in key cities such as Beijing. At the same time, overseas business grew rapidly on the basis of last year's low base. In the first quarter of '24, domestic and overseas Guangdong Province/achieved revenue of 45.38/13.74/122 million yuan respectively, +6.62%/+13.69%/+70.54%, respectively. The company adheres to the development strategy of “strong catering brand, food scale creation”, and adopts an integrated multi-format business model for food and catering, taking into account seasonal food and menu research and development. According to the official public account, in April 2024, Guangzhou Restaurant launched spring-limited dishes such as cabbage and spring bamboo shoots. At the same time, it launched the Dragon Boat Festival gift box promotion and launched five kinds of rice dumpling gift boxes, including “Duanyang Ankang,” which takes into account the dual layout of food and catering.
The gross margin of category restructuring declined, cost control showed results, and profit performance was stable. According to the company's announcement, the company's gross margin was 29.81% in 24Q1, -2.58pct year on year, mainly due to the increase in revenue from other products and catering businesses with relatively lower gross margins. 24Q1 achieved an expense ratio of 19.34% over the period of -2.25pct, with sales/management/R&D/finance expenses ratios of 9.8%/8.4%/1.8%/-0.7%, respectively, -0.36/ -0.70/+0.07/-1.27pct, respectively. The company optimized various expenses, promoted cost reduction and efficiency, while empowering product upgrades and strengthening the omni-channel marketing system with R&D innovation. Under the combined influence, the company achieved a net interest rate of 7.0% to mother in 24Q1, -0.54 pct year on year.
Investment analysis: The company's channel side has established an online+offline sales system, and is continuously promoting market layout outside the province to support the growth of the food business. At the same time, multiple catering brands are expected to effectively handle the release of consumer catering demand, and the business is expected to continue to grow and contribute to incremental growth. Considering the continuing impact of the company's competitive pace in the food industry, we lowered our 24-26 profit forecast to 6.09/711/818 million yuan (previous value was 682/8.19/948 million yuan), corresponding to the 24-26 PE 17/14/13 times, maintaining the “buy” rating.
Risk warning: terminal consumption returns to uncertainty, competition in the prepared food industry intensifies, promotion of new products falls short of expectations, etc.