Event: Jiabiyou announced its 2023 annual report and 2024 quarterly report. In 2023, the company achieved operating income of 444 million yuan, +2.39% year over year; net profit to mother of 91.37 million yuan, +41.95% year over year; net profit without return to mother of 62.45 million yuan, +103.17% year over year. Among them, 23Q4 achieved operating income of 119 million yuan, -25.72% year on year, net profit of 30.96 million yuan, +329.44% year over year; net profit without return to mother was 21.4 million yuan, which changed from loss to profit year over year. In 24Q1, the company achieved operating income of 117 million yuan, +33.34% year over year, net profit of 24.31 million yuan, +69.93% year over year; net profit without return to mother of 18.85 million yuan, +158.16% year over year.
Comment:
After many disruptions, 23 years ended smoothly. The new national standard for infant formula was released as scheduled in 2023, but there were delays in product registration and marketing for many manufacturers. Second, the number of births once again showed a year-on-year decline, putting pressure on the infant formula market on the demand side. Looking at the company's supply side, the increase in the company's powder production capacity supply capacity utilization rate has been hindered, putting pressure on the company's powder supply. Under the influence of these multiple factors, the company still made every effort to supply core products to the market. ARA, DHA, and SA achieved revenue of 302 million yuan, 79.4 million yuan, and 23.21 million yuan respectively, +18.22%, 23.09%, and -32.61% compared with the same period last year. On the gross margin side, the overall gross margin reached 42.40% in '23, a slight increase over the previous year. Among them, ARA gross margin was -4.39 pct year over year and DHA gross margin was +4.06 pct year over year, all due to changes in the share of oils and powders. On the cost side, the company's sales expense ratio and R&D expense ratio increased slightly, while the management expense ratio declined significantly year-on-year due to a reduction in equity payment expenses. In the end, the company ended with a net profit of 91.37 million, which is close to achieving the estimated profit target of 100 million yuan for the whole year.
The 24Q1 business was booming, and profits increased sharply year over year. Affected by the continued release of the new national standard effect, the good performance of overseas orders, and the start of supply of new powder production capacity, the company achieved a high year-on-year increase in revenue in 24Q1. From the perspective of gross margin, due to the relatively high share of overseas customers and good gross margin for domestic customers, 24Q1 gross margin increased 2.14 pct over the same period last year. On the cost side, the company's net profit margin improved markedly due to the fact that equity payment fees were no longer charged, and the company's net profit margin improved markedly due to a sharp year-on-year decrease in management expenses.
The industry resumed superposition and the reversal of companies, and there were many highlights this year. Looking at the industry context, considering the impact of past epidemics and the traditional customs of this year's Dragon Year, we expect the number of births to pick up gradually this year. Second, the effect of last year's new national standard continues, and it is expected that this year and next year will still bring growth to upstream raw ingredient suppliers. At the company level, after a year of hard work, customers have successively switched to the company's new powder production capacity. According to clients, the company continues to increase its supply volume for many overseas customers. On the product side, the company is actively promoting the approval and production capacity construction of HMO products. Production line construction has already been initially completed, and the products are expected to be approved in the first half of this year.
Profit prediction and investment rating: A bright start to Q1, grasping the resonance between performance and expectations. As mentioned before, on the one hand, the company has achieved a good performance in 24Q1, and we think the trend is expected to continue in the future. On the other hand, there are many expectations this year, both in the industry context and in the company itself, providing guidance and direction for the company's future performance. We expect the company's 2024-2026 EPS to be 0.68/0.87/1.06 yuan, corresponding to 2024-2026 21X, 17X, and 14X PE respectively, maintaining the company's “buy” rating.
Risk factors: customer orders fall short of expectations, product price reduction exceeds expectations