occurrences
The company announced the 2023 Annual Report and 2024 Quarterly Report. In 2023, the company achieved total revenue of 799 million yuan (+0.10%), net profit of 135 million yuan (-5.42%), and net profit of non-return to mother of 131 million yuan (+2.07%).
With 2023Q4, the company achieved total revenue of 180 million yuan (-5.67%), net profit attributable to mother of 0.28 million yuan (-13.91%), and net profit of non-return to mother of 0.27 million yuan (-7.14%). With 2024Q1, the company achieved total revenue of 166 million yuan (-17.92%), net profit attributable to mother of 0.19 million yuan (-46.94%), and net profit without return to mother of 0.19 million yuan (-46.36%).
The company plans to pay a cash dividend of 0.70 yuan (tax included) per share, with a dividend rate of 70.93%.
Supermarket channels increase revenue, and the number of channels is steadily expanding
1) Add supermarket teams to expand supermarket channels and increase revenue. In 2023, the company's retail, wholesale, direct sales and other, e-commerce and supermarket channel revenue were 5.26, 2.13, 0.14, 0.02, and 0.33 billion yuan respectively, compared with -4.81%, -1.50%, +25.58%, -71.66%, NA, direct sales and other channels. In addition, in 2023, the company added a supermarket team to expand supermarket channels and increase revenue; in the company's retail channels, the revenue of franchise stores was 4.28 billion yuan and 97 million yuan, respectively, +0.65% and -23.16%. Revenue performance is relatively steady. 2024Q1, the company's retail, supermarket, wholesale, direct sales and other e-commerce channel revenue was 1.13, 0.08, 0.39, 0.04, and 0.1 billion yuan, respectively, -16.99%, +25.04%, -24.89%, -19.02%, and -27.05% year-on-year, and supermarket channels continued to grow.
2) Channels are expanding steadily, and individual stores are under pressure. At the end of 2023, the number of franchised and distributed stores was 1,823 and 728 respectively, with a net increase of 132 and 51 for the whole year, with growth rates of 7.81% and 7.53% respectively. It is estimated that single store shipments were 23.50 and 133,800 yuan, respectively, -6.64% and -28.54% year-on-year; at the end of 2023, the number of supermarket and wholesale customers was 83 and 535, respectively, with a net increase of 46 and 98 for the whole year, with growth rates of 124.32% and 22.43% respectively.
3) The number of franchised stores was adjusted in Q1. At the end of 2024Q1, the number of participating and distribution stores of the company was 1816 and 743, respectively, a net increase of -7 and 15 in Q1, 87 and 547 supermarkets and wholesale customers respectively, and a net increase of 4 and 12 in Q1.
4) East China and Central China are relatively stable, while Southwest China is growing faster. In 2023, the company's revenue in East China, Central China, Southwest China and North China was 7.45, 0.23, 0.13, and 0.06 billion yuan, respectively, -0.49%, +0.24%, +75.99%, and -14.87%, accounting for 94.54%, 2.93%, 1.62%, and 0.81%, respectively. Central China and East China are growing rapidly; 2024Q1, the company's revenue in East China, Southwest China, and North China was -17.51%, -29.53%, +8.26%, and -46.17%, respectively.
Gross margin is relatively stable. Net profit margin is affected by factors such as an increase in paid investment and a decrease in income 1) The gross margin has increased steadily, and the net profit margin to mother is affected by increased paid investment, government subsidies, and a decrease in investment income.
In 2023, the company's gross margin was 26.38%, +2.30pct year on year. The gross margin of franchise, distribution, direct sales and other, wholesale and e-commerce channels increased by 1.48, 2.56, 3.00, 4.12, and 7.16 pct, respectively; net profit margin was 16.95%, -0.99 pct year on year; the decline in the company's net return interest rate was mainly due to:
a) Cost ratio increase: The company's sales, management, R&D, and financial expense ratios were 5.01%, 5.37%, 0.48%, and -2.79%, respectively, compared with +1.16, +1.47, +0.05, and -0.72pct. The increase in sales expenses was mainly due to increased personnel and marketing expenses. The increase in management cost ratio was mainly due to increased personnel and increased cost sharing for new factory use;
b) Decrease in government subsidies: the company's other revenues/revenue -0.32pct to 0.19% year-on-year, mainly a decrease in government subsidies;
c) Decrease in investment income: the company's investment income/revenue -1.34pct to 0.64% year-on-year.
2) The net profit margin for Q1 was affected by factors such as a decrease in gross margin, an increase in investment costs, and a decrease in return on investment. 2024Q1, the company's gross margin was 25.00%, -1.21pct year on year, and the net profit margin to mother was 11.39%, -6.23pct year on year. The decline in net interest rate to mother was mainly affected by increased investment expenses (sales and management expenses ratio +1.69, +2.94 pct year on year), increased credit impairment losses, and a decrease in other income and investment income.
Investment advice
We expect the company's net profit to be 1.22, 1.36, and 155 million yuan respectively in 2024, 2025, and 2026, up -9.95%, 11.54%, and 13.69% year-on-year, corresponding to PE 31, 28, and 25 times (market value of 3.8 billion yuan) on April 26, respectively, maintaining the “increase” rating.
Risk warning
Food safety risks, raw material price fluctuation risks, and risk of product expansion falling short of expectations.