Incident: The company released its 23 annual report, and achieved total revenue of 3.244 billion yuan, +25.85% year on year; net profit to mother of 809 million yuan, +55.28% year over year; of these, 23Q4 achieved total revenue of 807 million yuan, -14.90% year on year, and net profit to mother of 144 million yuan, or -33.37% year on year.
Revenue side: The fourth quarter of a single quarter was under high pressure, and a good growth trend was maintained throughout the year. 1) By product type, pre-mixed/edible essentials/other businesses achieved revenue of 28.84/3.17/63 billion yuan respectively in 2023, +27.76%/13.18%/12.35% compared with the same period last year. 2) Looking at the subregions, East China/South China/West China/North China/North China/other regions achieved revenue of 10.89/9.26/5.85/6.00/ 0.63 billion yuan respectively in 2023, -1.69%/+42.17%/58.09%/47.29%/12.35% year-on-year. Revenue continued to grow throughout the year. Strong and jumped to become the company's largest single product. The revenue slowdown in the fourth quarter was mainly due to Strong's rapid rise in popularity during the same period last year. Furthermore, due to the recovery of the scene, new packaging, and IP cooperation, etc., the recovery was achieved; it was refreshing to enter snack sales channels to find new volume, launch new flavors such as sugar-free, and clarify the universal scenario.
Profit side: 23/23Q4, the company achieved gross profit margin of 66.70%/66.23%, +2.92/-0.73 pcts year on year; achieved a net profit margin of 24.72%/17.73%, +4.63/-5.18 pcts year on year. In terms of expenses, the company's sales/management/R&D expenses rate in 2023 was 21.69%/5.92%/3.25%, -2.43/-0.74/-0.07pcts year-on-year. 23Q4 The company's sales/management/R&D expenses rate was 26.40%/8.36%/4.15%, +3.48/2.66/1.06 pcts year-on-year. The company's profit was slightly under pressure in the fourth quarter, mainly due to a high base for the same period, which affected scale; second, the company's sales expenditure increased, and the cost ratio was well controlled and declined year-on-year throughout the year.
Investment advice: Promote both profit and income with strong diversification, and strengthen the competitive advantage of the industrial chain layout. The company continues to build the “358” product matrix. It is expected that strong and refreshing will continue to expand with marketing support. The strengthening of the slightly intoxicated solitary scenario is beneficial to increasing stickiness, and is expected to grow further on the basis of recovery. Meanwhile, the expansion of production bases in Tianjin, Guangdong and Shanghai will increase the company's production capacity and storage capacity to support long-term expansion. Finally, with the company's entire industry chain layout, spirits products are expected to create another growth pole. In 2024-2026, the company is expected to achieve revenue of 38/43/49 billion yuan, +15%/14% YoY; net profit to mother of 10/11/1.3 billion yuan, +18%/17% YoY, corresponding to PE 22/19/16x, maintaining an “increase in holdings” rating.
Risk warning: Food safety risks, increased industry competition, risk of new product market performance falling short of expectations.