Incidents:
Ganyuan Foods released its 2023 annual report and 2024 quarterly report. In 2023, the company achieved revenue of 1,848 billion yuan, an increase of 27.36%; realized net profit of 329 million yuan, an increase of 107.82% over the previous year; and realized net profit of 292 million yuan after deduction, an increase of 96.76% over the previous year. The 24Q1 company achieved revenue of 586 million yuan, a year-on-year increase of 49.75%; net profit to mother was 91 million yuan, an increase of 65.30% over the previous year.
Deeply implement the “omni-channel+multi-category” business model
By product, in 2023, comprehensive nuts and soybeans/green peas/melon kernels/broad beans achieved revenue of 5.04/4.65/2.73 billion yuan, with year-on-year growth rates of 32.16%/26.04%/18.38%/11.02%, respectively, accounting for 27.30%/25.19%/14.78%/12.53%, respectively. In 2023, distribution/e-commerce achieved revenue of 15.72/216 million yuan respectively, with year-on-year growth rates of 27.63%/29.39% respectively, accounting for 85.08%/11.69% of revenue. East China/North China/Central China/Southwest/E-Commerce/South China/Northwest/Northeast China achieved revenue of 4.53/3.26/2.89/2.45/2.16/1.30/0.95/0.78 billion yuan respectively, with year-on-year growth rates of 53.14%/12.97%/19.97%/22.50%/29.39%/36.96%/9.41%/21.85%, accounting for 24.52%/17.64%/15.63%/13.25%/11.69%/7.06%/5.16% /4.23 % As of the 2023 annual report, the number of dealers increased by 235 to 3158 year-on-year, with a net increase of 102/55 in the East China/South China region.
Promote cost reduction and efficiency, and increase profit levels
In 2023, the company actively expanded overseas procurement channels, compounding the decline in the market market itself and the decline in raw material procurement costs. The gross margin for 2023/24Q1 was 36.24%/35.39%, respectively, +1.98/-0.96pct. Benefiting from continued cost reduction and efficiency, the company's sales expense rate/management expense rate/R&D expense ratio in 2023 were 11.50%/3.78%/1.26%, respectively, -2.55/-0.72/-0.30pct, respectively, and the 24Q1 company's sales cost rate/management fee rate/R&D expense ratio were 13.10%/3.49%/1.06%, respectively, -0.57/-0.83/-0.08pct year on year, respectively. The company implemented the “omni-channel+multi-category” business model and deepened multi-dimensional strategic upgrades such as quality control upgrades, product upgrades, brand upgrades, and management upgrades. In 2023/24Q1, the company's net margin increased by 6.90/1.48pct to 17.81%/15.58%, respectively.
Profit Forecasts, Valuations, and Ratings
Taking into account the penetration of the old three models and the cultivation period of flavored nuts, we adjusted the company's revenue for 2024-2026 to be 24.41/30.31 billion yuan, up 32.13%/24.17%/19.05%; net profit to mother was 4.03/503/617 billion yuan, up 22.43%/24.85%/22.77%, corresponding to a three-year CAGR of 23.31% and EPS of 4.32/5.40/6.62 yuan/share, respectively. Given that the company is actively expanding its product matrix and is expected to accelerate expansion after omni-channel sorting, the company was given 24 times PE in 2024, with a target price of 103.75 yuan, maintaining a “buy” rating.
Risk warning: risk of product quality and food safety, risk of weakening competitive advantage of offline channels, risk of increased market competition, etc.