Incident: In 2024Q1, the company achieved revenue of 853 million yuan, +11.34% year over year; net profit to mother was 176 million yuan, +37.20% year over year; net profit after deducting non-return to mother was 147 million yuan, +23.47% year over year.
The base material is still under pressure, and the Chinese remix and winter tunes maintain good performance. By business, 2024Q1 Hot Pot Seasoning/Chinese Dish Seasoning/Sausage and Bacon Seasoning/Other Products achieved revenue of 2.93/4.95/0.33/0.3 billion yuan respectively, +1.18%/+17.75%/+21.79%/+11.51% over the same period last year. Among them, 1) Dahongpao's sales fell short of expectations due to the pressure of the hot pot base, and Good People maintained positive growth as a whole. 2) Sausage and bacon seasoning maintained high growth mainly due to the company's early channel layout and the company's increased investment in this category in the field of new media, thus accelerating the nationwide expansion of winter seasoning. 3) Chinese polymorphism showed good growth, mainly due to the integration of some food extract products and good progress in crayfish distribution.
Food extracts continue to perform well and contribute to the growth of online channels. By channel, 2024Q1 offline/online channels achieved revenue of 719/132 million yuan respectively, or +2.94%/+101.23% year-on-year. The online performance was impressive. On the one hand, the combination of food extracts brought in new volume; on the other hand, e-commerce is the company's key channel to gradually increase the implementation of near-market retail, and the joint intensive cultivation of the retail division and the new retail division has had great results.
The gross margin level is at a high level over the years, and cost improvement+operational efficiency improvements have led to profit optimization.
The company's 2024Q1 gross margin was 44.05%, +3.43pct year on year; sales/management/R&D/finance rates were +2.18/-0.83/-0.06/+0.07pct year on year; net margin was 20.90%, +4.22pct year on year. The main reasons for the continuous improvement in gross margin are 1) the overall cost of raw materials has decreased while the scale of sales has increased, and 2) the improvement of the product structure (the proportion of high-margin winter products and the like) has increased. Furthermore, based on improvements in the company's production and operation efficiency and a significant increase in investment income over the same period, the company's profitability has greatly improved.
Investment advice: We expect the company to achieve revenue of 36.94/43.24/4.984 billion yuan in 2024-2026, +17.32%/+17.06%/+15.26% year-on-year, and achieve net profit of 5.59/6.78/799 million yuan, +22.50%/+21.21%/+17.75%, EPS of 0.53/0.63/0.75 yuan respectively, and corresponding PE 26.6/21.9/18.6x, respectively. Maintain the company's “gain” rating.
Risk warning: risks of sales falling short of expectations; food safety risks; risks such as fluctuations in raw material prices.