Introduction to this report:
The company's big B business grew rapidly in '23, short-term fluctuations in 24Q1, and product and channel development efforts or gradual increase drove sales acceleration, and the long-term growth trend did not change.
Key points of investment:
Maintain an “Overweight” rating. Considering weak demand for downstream catering and increased competition among supply chain companies, the company's EPS forecast for 2024-25 was lowered to 1.71 (-0.62) and 2.13 (-0.85) yuan, and the 26-year forecast was added by 2.62 yuan. Considering the short-term decline in industry valuation compared to the previous period, the company's own growth rate was strong, and the target price was lowered to 51.6 yuan.
The 23Q4 results were generally in line with expectations, and the 24Q1 performance fell short of expectations. The company's revenue for 23 years was 1,901 million yuan, +27.69% year on year; net profit to mother was 134 million yuan, +31.43%; single 23Q4 revenue was 573 million yuan, +25.02% year over year, net profit to mother was 40 million yuan, +23.15% year over year; single 24Q1 revenue was 463 million yuan, +8.04% year over year, net profit to mother of 35 million yuan, and +14.16% year over year.
Big B surged in '23, short-term fluctuation in 24Q1. Direct management/distribution revenue was +49.9%/+15.7%, respectively. Among them, the top four direct management customers were +68%/60%/43%/37%, respectively, and direct management/distribution gross margins were -0.1/+0.8pct, respectively. The direct management/distribution business increased significantly and maintained a stable gross profit margin. 24Q1 is expected to slow down the overall growth rate due to a decline in core Big B business revenue due to competition, base and other factors. The gross margin is expected to be mainly an increase in small B's gross margin and relatively stable. Sales/management rates are +0.8/+0.5 pct, respectively. The gross sales margin expands, and the net profit margin is +0.4 pct to 7.5% year over year.
Product and channel development efforts are gradually increasing, and long-term growth can be expected. The company will continue to expand new products and develop regional chain customers, reasonably match corresponding expenses, and strengthen dealer collaboration. Big B's growth rate may be gradually boosted, and small B can be expected to continue to develop and grow rapidly. The company announced a repurchase plan to use 0.6-100 million yuan to repurchase shares for cancellation, demonstrating confidence in long-term growth.
Risk warning: Downstream catering recovery is weak, market competition intensifies, raw material costs fluctuate.