On April 25, 2024, Liangpin Store released the 2023 Annual Report and the 2024 First Quarter Results Report.
Key points of investment
The profit side is under pressure in the short term, and the brand's new positioning has been revitalized
The company's total revenue for 2023/2023Q4/2024Q1 respectively
80.46/2,046/2,451 billion yuan, respectively, -15%/-16%/+3% year-on-year, respectively. The same decrease in revenue in 2023 was mainly due to the decline in online channel revenue due to market and platform changes. The company's net profit for 2023/2023Q4/2024Q1 was $180/-0.11/062 million yuan respectively, down 46%/123%/58% respectively, mainly due to the company's implementation of a nationwide one-time price reduction. Although the price reduction is expected to significantly increase the number of customer orders, the decline in customer unit prices has clearly reduced net profit performance. The gross margin of the 2023/2024Q1 company was 27.75%/26.43%, respectively, +0.2pct/-3pcts year over year, respectively. The gross margin in 2023 increased steadily, moderately, and slightly year-on-year, mainly due to joint procurement and contract processing to reduce costs/long-tail product SKUs. The 2023/2024Q1 sales rate was 19.55%/17.44%, up 0.9 pct/0.4 pct, respectively. The 2023/2024Q1 management rate was 5.55%/4.85%, +0.5pct/-0.2pct, respectively. As a result, the company's net interest rate for 2023/2024Q1 was 2.23%/2.54%, respectively, a decrease of 1 pct/4pcts, respectively. The company released a new brand value proposition “Natural Health New Snacks” in 2024. Since the company is making price and brand positioning adjustments, consumer re-education will still take a certain amount of time and cost, so the profit side is under pressure in the short term. In the long run, new brand positioning/opening stores in advantageous regions is expected to lead the company to expand its sales scale and promote supply chain optimization, and its long-term profitability is expected to increase.
The product stratification strategy is clear, and the group buying channel is worth looking forward to
By product, roasted nuts/dried fruits/meat snacks/vegetarian mountain jelly/candy pastry/other revenue was 13.23/6.67/16.96/4.90/18.71/1.904 billion yuan, respectively, down 16%/19%/20%/9%/12%, respectively. Revenue in all categories declined in 2023 due to the reduction of long-tail SKUs/price reductions and changes in industry channels. The company and Snack Genie collaborate to cover different consumer groups to meet various consumer needs through differentiation of product pallets and price lists. As the number of long-tail SKUs is reduced and product strategies are implemented, operational efficiency is expected to improve in the future. In addition, the company's New Year gift box sales increased 25% in 2023, and the company maintained its dominant position in the gift box market through a commitment to product innovation and market expansion. By region, revenue for Central China/East China/Southwest/South China/North China/Northwest/Northwest/Other regions was 21.32/7.19/6.83/5.63/1.97/3.658 billion yuan, respectively, +0.5%/-3%/+8%/+19%/+21%/-30%, respectively. By sales model, e-commerce, franchise/direct retail/group buying business revenue was 31.67/24.00/18.94/490 billion yuan, respectively, -33%/-7%/+22%/-1%, respectively. In 2024, the company will deepen the expansion of group buying channels, optimize the product structure, and promote steady growth in performance.
Profit forecasting
We are optimistic about the company's continued store development and continuous category innovation. The company launched the “New Natural Health Snacks” brand proposition in 2024, and profits will be pressured in the short term due to price and brand positioning adjustments. In the long run, the new positioning and supply chain optimization are expected to help increase sales and profits. According to the annual report and the first quarter report, EPS is expected to be 0.50/0.59/0.69 yuan in 2024-2026, respectively. The current stock price is 30/25/21 times PE, respectively, maintaining a “buy” investment rating.
Risk warning
Downward macroeconomic risks, falling short of expectations in store development, risks of rising raw materials, and further intensification of competition risks, etc.