Event: The company released its 2023 annual report and 2024 quarterly report. In 2023, the company achieved total revenue of 3.499 billion yuan, +20.22% year-on-year; net profit to mother was 73 billion yuan, or -49.21% year-on-year. In 4Q23, the company achieved total revenue of 917 million yuan, +6.67% year over year; realized net profit to mother - 85 million yuan, -297.22% year over year. In 1Q24, the company achieved total revenue of 916 million yuan, +15.31% year-on-year; realized net profit of 77 million yuan, +53.96% year-on-year.
The number of catering customers continues to increase, and distribution channels are gradually being restored. In 1Q24, the company achieved steady growth in revenue. By product, frozen baked goods accounted for about 61% of revenue, which was basically the same as the previous year; revenue from baked goods accounted for about 39%, up about 56% year on year. Among them, UHT series cream products maintained a good growth trend, driving the company's cream sector to double in the first quarter. By channel, distribution channel revenue accounted for about 51%, with a year-on-year increase of nearly 25%. The increase was mainly driven by new cream products; supermarket channel revenue accounted for about 31%, a year-on-year decrease in the number of units, which was mainly affected by high-tier cities returning home during the Spring Festival and last year's higher base; the revenue from catering and new retail channels accounted for about 17%, an increase of more than 50% year on year. Direct supply chain customers and catering dealers all maintained a relatively rapid growth trend.
Gross margin has been restored, and there is a clear trend of cost reduction and efficiency. In terms of costs and expenses, the company's gross profit margin was 32.6% in the first quarter, up 0.6% year on year. The first reason was that the company's capacity utilization rate increased to a certain extent year over year, and second, measures related to the company's procurement optimization were implemented one after another, and comparable average procurement prices declined to a certain extent. The sales and R&D expense ratios were 12.1% and 3.7% respectively, which remained stable year over year, in line with the company's budget control goals. The management fee ratio was 6.6%, down 0.7% from the previous year; after excluding the impact of share payment fees, the comparable management fee ratio increased by about 0.5% compared to the same period last year, but it is already lower than the average for the whole of last year. The company will draw up measures based on cost control to reduce expenses and improve operating efficiency. Overall, in 1Q24, the company's net interest rate to mother was 8.38%, up 2.1 pcts year-on-year, and profitability increased significantly.
Use large single products, large customers, and large dealers as a starting point to improve production and operation efficiency. On the revenue side, the company further enhances the product quality of large single product categories, and at the same time is more in line with industry trends and the evolution of consumer preferences in terms of new product development, and tilts sales resources towards large customers and dealers, continuously improving the input-output ratio of the company's resources. On the profit side, in 2024, the company aims to improve the company's production and operation efficiency in terms of cost control, optimization of procurement, optimization of warehousing and logistics, and strict control of personnel staffing while achieving steady growth.
Investment advice: Maintain a “buy” rating. According to the annual report and quarterly report, considering the company's efforts to achieve steady growth while improving operating efficiency, we expect the company's 24-26 revenue to be 42.82/52.25/6.330 billion yuan (4.721/5.844 billion yuan in the previous 24/25 year), respectively, and net profit of 3.51/452 billion yuan (3.52 billion yuan in the previous 24/25 year), maintaining the “buy” rating.
Risk warning: raw material price fluctuations exceed expectations, new customers fall short of expectations, food safety incidents.