On April 26, 2024, Miracoland released its results report for the first quarter of 2024.
Key points of investment
Revenue was under year-over-year pressure, and profitability improved significantly
The company's total revenue for 2024Q1 was 950 million yuan (down 7% from the same period). Among them, sales revenue increased in January, and revenue in February-March was slightly under pressure. Net profit to mother was 41 million yuan (up 71% from the same period). The high increase in profit was mainly due to the low 2023Q1 base. On the profit side, 2024Q1's gross margin also increased by 0.4 pct to 33.09%, mainly due to a drop in raw material prices. Sales/management expense ratios were 22.40%/5.38%, and sales expenses were reduced by 2 pct/0.3 pct respectively. Sales expenses were restrained and concentrated on channels such as CCTV/variety/terminal gift boxes. Subsequent companies will follow the pace of new product launch to release expenses in stages. Taken together, the company's 2024Q1 net margin also increased by 1 pct to 4.35%. As the cost side downwards/sales fee investment controls, profits will gradually be released. On the cash flow side, 2024Q1's net operating cash flow was 220 million yuan (2023Q1 was -116 million yuan), a significant improvement over the previous year.
The decline in the cheese business has narrowed, and channel intensive cultivation continues to advance
The promotion of cheese products helped stabilize its main business. 2024Q1's cheese/trade/liquid milk revenue was 785/0.82/081 million yuan respectively, down 3%/36%/0.4% respectively. Compared with 2023, the decline in the cheese business is expected to be mainly due to the company's room temperature cheese sticks being sold in snack sales channels. Subsequent companies will continue to expand the cheese category and develop room temperature cheese snacks. The volume of new products is expected to drive the cheese business to recover steadily. Channel concentration continued to advance. 2024Q1's distribution/direct channel revenue was 735/131 million yuan, respectively. As of the end of 2024Q1, the company had a total of 4,807 dealers, a net decrease of 229 from the beginning of the year, putting pressure on distribution channel revenue. Subsequent companies, on the one hand, expanded network coverage/increased display area in distribution channels, and on the other hand, continued to develop food/tea customers, driving B-side business growth. As channel development progresses, the main business scale is expected to expand steadily.
With the expansion of scale in the central region, 2024Q1's revenue in the North District/Central District/South District/South District was 3.74 billion yuan, respectively, -15%/+13%/-22% year-on-year, respectively.
Profit forecasting
As a leading cheese company, the company explores room temperature cheese stick series products to tap new market volume. As production capacity climbing/cost control effects are released, the company's profitability is expected to improve further. According to the first quarterly report, EPS is expected to be 0.24/0.36/0.51 yuan in 2024-2026, and the current stock price is 52/35/25 times PE, respectively, maintaining a “buy” investment rating.
Risk warning
Macroeconomic downside risks, room temperature cheese stick promotion falling short of expectations, cheese sector growth falling short of expectations, increased market competition, etc.