Incident: The company released its 2024 quarterly report. Total revenue for the first quarter of 2024 was 802 million yuan, +5.51% year over year; net profit to mother was 169 million yuan, -9.80% year over year.
On the revenue side, it maintained positive growth under a high base, and the characteristics of strong dragon tanks were outstanding. Total revenue of 802 million yuan was achieved in 24Q1, an increase of 5.51% over the previous year. The company is still able to maintain growth under the high base of strong and continuous sales in 23Q1. The product matrix is working together to repurchase products and cultivate and verify consumer stickiness. During the Spring Festival, Qiangshuang launched Dragon Cans to strengthen related marketing, and Qingshuang actively promoted channel sales growth. The 358 product matrix continued to be built to jointly help increase revenue.
On the profit side, cost investment increased, and profitability fluctuated in a single quarter. 24Q1 achieved a gross profit margin of 68.32%, a year-on-year increase of 2.86pcts; achieved a net profit margin of 20.93%, a year-on-year decrease of 3.70 pcts. In terms of expenses, 24Q1 company's sales/management/R&D expenses rates were 29.41%/5.85%/3.00%, respectively, with year-on-year changes of +8.77/1.34/0.18pcts, respectively. The company's net interest rate has declined a lot. The main reason is to increase the share of marketing in a single quarter to seize the Spring Festival marketing period, but looking at reasonable advertising rate planning throughout the year, the impact of quarterly fluctuations is expected to fade.
Strong diversification promotes both profit and revenue, and the industrial chain layout strengthens competitive advantage. The company will continue to build the “358” product matrix. We expect that Strong and Clean will continue to be sold with marketing support, and that the enhanced solitude scenario is beneficial to increasing stickiness, and is expected to grow further on the basis of sales recovery. At the same time, the company's production bases in Tianjin, Guangdong and Shanghai have been expanded one after another, which will increase the company's production capacity and storage capacity to support long-term expansion. Finally, with the company's entire industry chain layout, spirits products are expected to create another growth pole, and the new business is worth looking forward to.
Investment advice: In 2024-2026, the company is expected to achieve revenue of 38/43/49 billion yuan, +15/14%/14% year on year; net profit to mother of 10/11/13 billion yuan, +18%/17% year over year, corresponding to PE 22/19/16x, maintaining the “gain” rating.
Risk warning: Food safety risks, increased industry competition, risk of new product market performance falling short of expectations.