Introduction to this report:
Driven by the company's launch of high-end products such as 24Q1, the main business growth rate and profit performance are good. It is expected that large regional products will continue to gain strength and new products will continue to be developed.
Key points of investment:
The investment recommendation maintains an “overweight” rating. Considering the weak recovery in downstream demand in the industry, the company's EPS forecast for 2024-25 was lowered to 5.90 (-0.57) and 6.76 (-1.21) yuan, and the 26-year forecast was added by 7.72 yuan. Refer to the average price given by comparable companies to 20X PE for 24 years, and the target price was lowered to 118.0 yuan.
23Q4 results fell short of expectations, and 24Q1 performance exceeded expectations. The company's revenue for 23 years was 14.045 billion yuan, +15.29% year over year, net profit to mother of 1,478 billion yuan, +34.24% year on year; single 23Q4 revenue was 3.774 billion yuan, -6.27% year over year, net profit to mother of 356 million yuan, -13.41% year on year, mainly due to downstream industry demand factors and Spring Festival misalignment; single 24Q1 revenue of 3.755 billion yuan, +17.67% year on year, net profit to mother of 438 million yuan, +21.24% year on year. The company increased its annual dividend rate to more than 50% in mid-'23.
The main business performed well in 24Q1, and profits reached a new high. Revenue from noodle rice/meat/surime/dish products was +5.4%/+10.2%/+11.8%/+29.8%, respectively, and the overall gross margin/net margin was +1.3/+1.5pct, respectively. 24Q1 revenue from noodles/ meat/ surimi/ dish products was +4.4%/+27.7%/+12.3%, respectively. The main business is expected to perform well with revenue and profit driven by the volume of high-end products such as locked fresh packaging; 24Q1 gross margin was +1.8 pct year over year, which is expected mainly due to low raw materials and structural contributions; sales/management rates were +0.1/+0.3 pct, respectively. The income tax rate increased by +2.4 pct year over year; net interest rate was +0.3 pct to 11.7% year on year.
New regional products are relaying, and fresh packaging continues to gain strength. The company strengthens the territorial development and customer development of large regional products. Under strong channels, new products are expected to continue to gain strength in the future, and fresh packaging will continue to upgrade and maintain a good growth trend to drive structure and profit. The main business grew steadily, showing that business improvements can be expected.
Risk warning: macroeconomic fluctuations, increased market competition, and fluctuations in costs and expenses.