Incident Overview
In 2024Q1, the company achieved revenue of 1,485 billion yuan, +8.6% year over year; net profit to mother was 239 million yuan, +59.7% year over year; net profit after deducting non-return to mother was 237 million yuan, +63.91% year over year.
Analytical judgment:
The main condiment business in Q1 achieved restorative growth, and the share of core categories increased. At the same time, Q1 began to gradually implement reform measures. At the same time, the demand during the peak sales season during the Spring Festival. Overall revenue increased by 8.6%. Among them, the condiment business achieved operating revenue of 1.44 billion yuan, +10.04% over the same period last year, achieving restorative growth. By product, soy sauce, chicken powder, cooking oil, and other condiments achieved operating revenue of 9.5/1.8/1.10/210 million yuan respectively, compared with +13.44%/+16.83%/-5.54%/-0.31%, respectively. The growth rate of the core categories soy sauce and chicken powder was higher than the overall growth rate, and the product structure continued to be optimized. Looking at the subregions, the East/South/Midwest/North market revenue was 3.7/5.2/3.2/220 million yuan respectively, +24.48%/+2.64%/+9.90%/+7.61%, respectively. All regions achieved year-on-year growth. Corresponding companies had a net increase of 97 dealers, and the dealer team continued to expand.
The decline in raw material prices led to an increase in gross margin. On the cost side, the company's gross margin increased by 5.57 pct to 37.0% year-on-year. We believe it was mainly driven by lower procurement prices for condiment ingredients such as soybeans and additives, product structure optimization, and improved production and operation efficiency. On the cost side, the company's sales/management/R&D/finance expenses rates were 7.7%/6.40%/2.9%/-0.1%, respectively, -0.85/-0.04/-0.34/ -0.04pct compared to -0.85/-0.04/-0.04pct. The comprehensive rate decreased by 1.28 pct, and the cost investment efficiency continued to improve.
The increase in other income and investment income also boosted profits. Taken together, thanks to revenue growth+cost improvement+cost optimization, the company's net profit margin increased 5.15 pct to 16.1% year over year, and the corresponding net profit to mother increased 59.7% year over year to 239 million yuan, and profitability improved significantly.
The year 24 ushered in a good start, and 2024 is the beginning and year of the company's three-year strategic period. We are optimistic that the company will continue to focus on the development of the main condiment business, improve channel model efficiency, reshape Chubang brand awareness, create large single products, implement price repair and process follow-up, and implement improved promotion policies; at the same time, accelerate the shaping of organizational capabilities, promote market-based assessment mechanisms, and further enhance the certainty of performance growth. In the medium to long term, we are optimistic that the company will develop and improve its condiment business, and use its leading position in the condiment industry to continuously develop into a platform-based company to comprehensively enhance its competitive strength.
Investment advice
Referring to the latest performance report, we maintained the company's 24-26 revenue forecast of 58.07/68.52/ 8.021 billion yuan; raised the 24-26 EPS forecast of 0.96/1.17/1.43 yuan to 1.01/1.28/1.58 yuan; and the valuation corresponding to 29.43 yuan on April 26, 2024 was 29/23/19 times, respectively, maintaining the purchase rating.
Risk warning
Industry competition intensified, catering channel expansion fell short of expectations, and food safety. According to the company's announcement, on July 24, 2023, listed companies and relevant shareholders commented through the media on matters such as the appointment and dismissal of the company's executives, the board of directors, the board of supervisors and the shareholders' meeting, etc., which attracted great public attention and received a regulatory letter from the Shanghai Stock Exchange; on July 12, 2023, the company received a regulatory letter from the Shanghai Stock Exchange due to news media reports; on February 1, 2023, the company received a regulatory letter from the Shanghai Stock Exchange for major litigation matters; 2022 On December 16, the company's controlling shareholder received a regulatory letter from the Shanghai Stock Exchange; on February 11, 2022, it received a regulatory letter from the Shanghai Stock Exchange regarding the company's asset restrictions; on December 28, 2021, it received a regulatory letter from the Shanghai Stock Exchange regarding the company's controlling shareholders' holdings increase and pledge; in February 2023, Zhang Weihua and Zhu Hongbin, the company's deputy general managers, were investigated and placed in custody by the Zhongshan Municipal Supervisory Commission on suspicion of serious violations of the law.