Description of the event

The company released its financial report for the first quarter of 2024. During the period, it achieved revenue of 1,012 million yuan/ +10.04%, net profit to mother of 171 million yuan/ +2.22%, net profit of 67 million yuan/ +1.15%, and EPS of 0.12 yuan.

The current period received 2,5989 million yuan in government grants.

Incident reviews

The restaurant business continues to grow. The company's food manufacturing business/catering business achieved revenue of 603 million yuan/384 million yuan respectively, +8.99%/+13.33% year over year; of these, the food manufacturing business had revenue of 0.09 billion yuan/295 million yuan/299 million yuan, respectively, -20.09%/-4.1%/+27.56% year-on-year, with revenue accounting for -0.31pct/-4.34pct/+2.1pct, respectively. Mooncake revenue declined significantly. The flow of personnel during the Spring Festival holiday completely recovered, and visits to family and friends led to the sale of shortbread and cured meat Fast growth.

Overseas business resumed, and the scale of revenue outside the province expanded in an orderly manner. Direct sales/distribution and consignment sales had revenue of 193 million yuan/411 million yuan respectively, +8.95%/+9.01% year-on-year respectively. Revenue of 454 million yuan/137 million yuan/12 million yuan, respectively, in Guangdong Province, was +6.62%/+13.69%/+70.54% year-on-year respectively. Overseas business revenue growth was impressive, mainly due to external factors and the lower overseas business base for the same period last year; at the end of the 2024Q1 period, the number of distributors and agents in Guangdong/outside the province/overseas was 559 units/445 houses/26 households, respectively, compared to the beginning of the period.

During the period, the company's gross profit margin was 29.81% /-2.58pct, and the net profit margin was 7.96% /-0.61pct. The overall cost ratio is 19.34% /-2.25pct, of which the sales expense ratio is 9.8% /-0.36pct, the management expense ratio is 8.43% /-0.7pct, the R&D expense ratio is 1.81% /+0.08pct, and the financial expense ratio is -0.7% /-1.27pct, which is an increase in interest income. Net cash flow from operating activities was 122 million yuan/ -19.11%.

Investment advice

Continue to be optimistic about the collaborative development of the company's main food+catering businesses, orderly recovery of offline catering business, expansion of food manufacturing business capacity, increase in chain stores, and cross-regional development of dealers to drive the company out of South China and lay out across the country. We expect the company's 2024-2026 EPS to be 1.06\ 1.2\ 1.37 yuan respectively, corresponding to the company's closing price of 18 yuan on April 26, and the 2024-2026 PE will be 17\ 15\ 13.1 times, respectively, to maintain the “sharehold-A” rating.

Risk warning

There is a risk that consumer demand will fall short of expectations; the risk of rising raw material prices; the risk that offline consumption recovery falls short of expectations; and industry competition will increase the risk.