Incident: The company released its 2023 report and 2024 quarterly report. In 2023, it achieved operating income of 2.64 billion yuan (+7%), realized net profit of 170 million yuan (+19.7%), 2024Q1 achieved operating income of 210 million yuan (-4.1%), and realized net profit of -70 million yuan to mother. In addition, the company plans to distribute a cash dividend of 10 yuan (tax included) to all shareholders for every 10 shares, and 4 additional shares for every 10 shares.
Rice dumplings contributed the main increase, with chain stores leading the growth rate. 1. By product, rice dumplings, mooncakes, meals, egg products and pastries achieved revenue of 1.94 billion yuan (+11.1%), 230 million yuan (-4.3%), 150 million yuan (+4.8%), and 250 million yuan (-5.5%) respectively; 2024Q1 rice dumplings, meals, egg products and pastries achieved operating income of 90 million yuan (-2.3%), 40 million yuan (+1.4%), and 70 million yuan (-7.1%) respectively. The company launched a new product of high quality and price ratio of rice dumplings, which contributed mainly to revenue growth. 2. By sales model, chain stores, e-commerce, supermarkets, and distribution achieved revenue of 360 million yuan (+26.7%), 890 million yuan (+8.1%), 260 million yuan (-15.2%), and 9.1 billion yuan (+10.9%) respectively. Chain stores led the growth rate, and distribution contributed the main revenue. As of the end of 2023, the company had 714 dealers. The 2024Q1 chain of stores, e-commerce, supermarkets, and distribution achieved revenue of 70 million yuan (-5.4%), 0.3 billion yuan (-24.1%), 0.2 billion yuan (+15.4%), and 50 million yuan (+3.2%) respectively.
Profitability is rising steadily in 2023. 1. In 2023, 2024Q1 gross margins were 36.4% (-1.1pp) and 34.3% (-0.4pp), respectively. 2. In terms of cost rate, the 2023 sales expense rate, management fee rate, R&D expense ratio, and financial expense ratio were 20.9% (-1pp), 7.5% (+0.7pp), 0.7% (+0.1pp), and -0.2% (-0.6pp), respectively. The 2024Q1 sales expenses rate, management expenses rate, R&D expenses rate, and financial expenses ratio were 47.8% (+1.3pp), 20.2% (+0.3pp), 2.6% (+0.3pp), and -0.2% (+0.1pp), respectively.
3. In 2023, 2024Q1 net interest rates were 6.2% (+0.6pp) and -34%, respectively.
Actively cultivate the second product curve, and repurchases show confidence. 1. Starting in September 2023, the company plans to use its own funds to repurchase 60 million yuan to 100 million yuan of shares within 12 months for subsequent equity incentives or employee stock ownership plans, which is beneficial to the company's long-term development. 2. Establish a “rice dumpling +” product matrix to cultivate baked goods and quick-frozen products to meet daily sales and seasonal gift scenarios. The product range continues to be rich.
Profit forecasting and investment advice. The company's net profit for 2024-2026 is estimated to be 210 million yuan, 250 million yuan, and 290 million yuan, respectively, and EPS is 1.44 yuan, 1.71 yuan, and 1.99 yuan, respectively. The corresponding dynamic PE is 19 times, 16 times, and 14 times, respectively. The company was given a valuation of 23 times in 2024, corresponding to a target price of 33.12 yuan, maintaining a “buy” rating.
Risk warning. Food safety risks, risk of seasonal fluctuations in company operations, risk of brand counterfeiting.