24Q1 performance split: 24Q1 achieved operating income of 354 million yuan (YoY +10.74%); realized net profit attributable to mother of 40 million yuan (-3.43% YoY), and net profit of non-return to mother of 38 million yuan (+87.07% YoY).
Stores are expanding steadily, and there is a year-on-year gap in single-store revenue.
1) Brand stores: 24Q1 franchise/direct operating revenue was $258.06 million, respectively (+8.3%/-8.0% YoY). ① Looking at the number of stores: 203 new franchisees were added in 24Q1, a net increase of 51 to 5094 (net increase of 130 in 23Q1), and the opening schedule was in line with expectations. ② Looking at store quality: Single store revenue fell 2% year on year in 24Q1 (calculated based on the average store at the end of the period). We expect demand and the competitive environment to be affected.
2) Group meal business: The 24Q1 group meal business revenue was +20.9% to 83 million yuan, accounting for +2.0pct to 23.5% year over year. It is expected that the accelerated development of group meals in North China/Central China will all contribute to the accelerated development of group meals in the North China/Central China region, and the prepared dishes business is still in the process of being established, and we expect to continue to contribute to the performance.
3) Looking at regions: In 24Q1, East China/South China/Central China/North China revenue was +8%/38%/15%/24%, while revenue from regions other than East China accounted for +2.1pct to 17.7% year over year. Judging from the progress of store expansion, the number of stores in East China/South China increased by 81/64, a net increase of 3/53. The Hunan, Anhui, and Lianyungang markets actively expanded stores. At the same time, the 24Q1 North China stores decreased net by 5, and the closing rate improved year-on-year.
4) By product, 24Q1 revenue from noodles/filling/outsourced food products was +9%/17%/9% compared to the same period, and the share of fillings increased.
The deduction of non-net profit has basically returned to the 22Q1 level, and expenses have improved markedly.
24Q1 deducted non-net interest rate +4.35pct yoy to 10.66%, with gross margin +1.72pct yoy, which remained low for pork; sales/management rates were -2.27/ -2.02pct yoy, which was a change due to scale effects.
24Q1 non-recurring profit and loss was -0.19 billion yuan year-on-year, mainly due to Dongpeng's impact on changes in fair value and the disposal of transactional financial assets and some other illiquid financial assets.
Looking ahead to 24, the company will open 1,000 stores, and the Hebei market is expected to expand. Currently, the opening of stores is in line with progress; however, the restoration of the same store depends on recovering demand and increasing the proportion of lunch and dinner. In terms of epitaxial expansion, Q2 steam full flavor is expected to be combined, boosting the utilization rate of production capacity in Nanjing. The prepared food business was actively promoted, contributing to the second growth curve for group meals.
Profit forecast: Considering that there is still a gap in single-store revenue and combined with the annual report and quarterly report, we lowered the 24-25 revenue & net profit forecast values. We expect the company's revenue growth rates to be 15%/14%/13% for 24-26 (amount of 18.7/21.3/2.40 billion yuan, 24-25 years ago value was 19.9/2.29 billion yuan), and 16%/14%/13% (amount of 2.7/320 million yuan, 24-25 years ago), corresponding to PE 17X/15X/13X, maintaining a “buy” rating.
Risk warning: same-store recovery falls short of expectations; market competition intensifies; raw material costs rise too fast