Matters:
The company released its 2023 annual report and achieved annual revenue of 14.045 billion yuan, an increase of 15.29% over the previous year; net profit to mother was 1,478 billion yuan, an increase of 34.24% over the previous year. Net profit not attributable to mother was achieved of 1,365 billion yuan, an increase of 36.80% over the previous year. The company also released its 2024 quarterly report. In 24Q1, it achieved operating income of 3.755 billion yuan, an increase of 17.67% over the previous year; net profit to mother was 438 million yuan, an increase of 21.24% over the previous year. Profit distribution plan:
It is proposed to distribute a cash dividend of $1.775 (tax included) per share.
Ping An's point of view:
Gross margin improved superposition cost control, and net profit margin increased significantly. The company achieved a gross profit margin of 23.21% for the full year of '23, an increase of 1.25pct over the previous year. The sales/management/ financial expense ratios were 6.59%/2.74%/-0.64% respectively, down 0.58 from the same period, down 0.07/0.02 pct. Affected by factors such as a reduction in the company's investment in promoters and advertising, a reduction in share payment and sharing expenses, and an increase in interest income from bank deposits, the year-on-year decline in expenses during the period led to an increase in profit margins. The net profit margin for the full year of 23 was 10.69%, up 1.52 pcts year over year. The company achieved a gross profit margin of 26.55% in a single quarter in 24Q1, an increase of 1.84 pct over the previous year. The sales/management/finance expense ratios were 7.45%/3.12%/-0.48% respectively, up 0.09/up 0.30/0.16pct from the same period. The company achieved a net profit margin of 11.75% in 2024Q1, up 0.13pct year-on-year.
The main business grew steadily, and prepared dishes continued to gain strength. By product, the company achieved operating revenue of 39.27/44.09/25.45/2,627 billion yuan respectively for the full year of '23, with year-on-year increases of 29.84%/11.76%/5.40%/10.22%, respectively. The rapid revenue growth rate of frozen food products is mainly due to the merger of Xinliuwu and the increase in Yasui's Little Chef series products. The slowdown in revenue growth of quick-frozen rice products is mainly due to the impact of the supermarket channel market environment.
The dealer channel is operating steadily, and the e-commerce channel is growing rapidly. In '23, the company increased channel development, and the dealer channel achieved revenue of 11.369 billion yuan, a year-on-year increase of 15.96%; the supermarket channel achieved revenue of 847 million yuan, a year-on-year decrease of 13.42%, mainly due to a decrease in supermarket traffic and the closure of some stores; Tetong Direct achieved revenue of 1,071 million yuan, an increase of 28.88%; the e-commerce channel achieved revenue of 320 million yuan, a year-on-year increase of 145.92%; the new retail channel achieved revenue of 437 million yuan, a year-on-year decrease of 0.32%. The gross margin of the e-commerce channel decreased by 9.68 pct year on year, mainly due to the merger of new Liu Wu and increased promotion efforts of this channel; the gross margin of the new retail channel increased by 7.88 pct year on year, mainly due to product restructuring.
Financial forecasting and valuation: Affected by the macroeconomic environment, the slope of consumer consumption recovery falls short of expectations, and we still need to pay attention to demand recovery. According to the company's 23-year report, we slightly lowered our profit forecast. The company's net profit for 2024-2026 is estimated to be 1,686 billion yuan (previous value was 1,835 billion yuan), 2,004 billion yuan (previous value was 2,237 billion yuan), and 2,313 billion yuan (new). EPS was 5.75/6.83/7.89 yuan respectively, and PE corresponding to the closing price on April 26 was 14.6, 12.3 and 12.3, respectively. 10.7 times The company occupies a high growth track for B-side frozen food. High-quality management, stable distributors, and accumulated scale advantages have built up leading barriers, and we are optimistic about its continued strength in the field of prepared dishes. Maintain a “Recommended” rating.
Risk warning: 1) New product promotion falls short of expectations. If the company's acceptance of new products is low, new product promotion or failure to meet expectations will affect the company's performance growth. 2) Channel development falls short of expectations. If the development and cultivation of the company's dealers falls short of expectations, or if competitors increase investment in channel development, the company's channel development or failure to meet expectations. 3) The development of the prepared dishes business fell short of expectations. If the company's advantages do not move well into the field of prepared dishes, or if the market competition pattern deteriorates, the company's prepared dishes will not meet expectations. 4) Fluctuating raw material costs. The company's raw materials account for a high proportion of the cost. If the price of upstream raw materials fluctuates, it may have a certain impact on the company's profit. 5) Food safety risks. The safety of frozen food is a top priority. If food safety issues occur in the industry or company's production or storage, it will have a negative impact on the company's development.