24Q1 net profit after deducting non-return to mother +13.89% year-on-year. The 24Q1 company's revenue was 1,485 million yuan, +8.64% year on year, net profit to mother was 239 million yuan, +59.7% year on year, net profit after deducted from mother was 237 million yuan, +63.91% year on year, and net operating cash flow was 403 million yuan, +106.43% year over year. Among them, 24Q1 Delicious Fresh Company's revenue was 1,461 million yuan, and net profit to mother was 244 million yuan, +59.75% year over year, mainly due to lower purchase unit prices, product structure optimization, and revenue growth.
Gross profit margin and net profit margin increased significantly in 24Q1. The 24Q1 company's gross margin was 36.98%, +5.57pct year on year. We expect it to be mainly due to cost reduction, product structure changes, etc.; sales expense rate/management expense rate/ financial expense ratio will be 7.73%/9.24%/-0.11%, respectively, -0.85pct/-0.38pct/-0.04pct year on year; net interest rate will be 17.63%, +5.96pct year on year.
24Q1 soy sauce, chicken essence and chicken powder are growing faster. 24Q1 product revenues/yoy were soy sauce 947 million yuan/ +13.44%, chicken essence chicken powder 181 million yuan/ +16.83%, cooking oil 101 million yuan/ -5.54%, and other products 213 million yuan/ -0.31%, respectively.
The main sales area performed well in 24Q1. Looking at the regional distribution, the revenue/yoy of each region in 24Q1 was in the east, respectively.
372 million yuan/ +24.48%, South 522 million yuan/ +2.64%, Midwest 324 million yuan/ +9.9%, North 225 million yuan/ +7.61%. The net increase in the number of dealers in 24Q1 was 97 to 2,181. The net increase in each region was East/ -2, South/5, Midwester/65, and North/29, respectively.
The results of the reforms are worth looking forward to. 2024 is the beginning of the company's three-year strategic period and a year of momentum. The company carried out reforms and optimization in multiple dimensions such as organizational capacity and assessment and incentive system, and launched an equity incentive plan in March. The incentive targets covered core senior and middle management personnel such as the chairman and general manager & core business (technical) backbone, so that employees' interests were fully tied. We believe that the company has a good foundation and strong confidence in reform. As the results of the reform gradually become apparent, the company is expected to achieve accelerated growth.
Profit forecasting and valuation. We expect the company's 24-26 EPS to be 0.93/1.2/1.51 yuan respectively, and the relevant comparable 2024 PE will be 25-40 times higher. The company was given 35-40 times PE in 24 years, corresponding to a reasonable value range of 32.55-37.2 yuan, and given a “superior to the market” rating.
Risk warning. The impact of fluctuations in upstream raw material prices; production capacity releases falling short of expectations; increased competition in the industry, etc.