Incident: The company released its 2023 annual report and 2024 quarterly report, and achieved revenue of 1.901 billion yuan, +27.69% year over year; net profit to mother of 134 million yuan, +31.43% year over year; deducted non-net profit of 123 million yuan, +27.19% year over year. Looking at a single quarter, 23Q4 achieved revenue of 573 million yuan, +25.02% year over year; net profit to mother of 40 million yuan, +23.15% year over year; deducted non-net profit of 40 million yuan, +25.51% year over year.
24Q1 achieved revenue of 463 million yuan, +8.04% year over year; net profit to mother of 35 million yuan, +14.16% year over year; deducted non-net profit of 34 million yuan, +14.05% year over year. The company plans to distribute cash of RMB 1.90 (tax included) for every 10 shares to all shareholders in '23, with cash dividends accounting for 54.55% of net profit returned to mother in '23.
Focus on major core products, and the cultivation of new products is progressing in an orderly manner. In terms of products, the company continues to implement the strategy of creating a “core single product”, focusing on fritters, steamed fried dumplings, etc., while cultivating rice cakes, spring rolls, steamed dumplings, etc.
Revenue from deep-frying, baking/cooking/cooking and other products in '23 was 870/3.373/295 million yuan, respectively, compared with +24.23%/29.16%/26.41%/38.63%. Among them, the increase in deep-fried products was lower than the company's overall growth rate, mainly due to a slowdown in the growth rate of fritters in core customers, and the current market share of the core product, sesame balls, is high, and growth space is limited; the increase in bakery products was higher than the company's overall growth rate, mainly because the company increased its product restructuring efforts in 23, and there was an increase in bakery products; Other increases were relatively rapid, mainly due to the positive effects of rapid release of steamed and fried dumplings and prepared dishes.
Direct sales continued to be strong, and distribution growth was steady. In terms of channels, the direct management channel achieved revenue of 775 million yuan in '23, +49.89% over the same period. The company increased its customer service efforts. By the end of '23, the number of the company's major customers was 197, +27.92% over the same period last year, and is actively developing potential catering customers. The distribution channel achieved revenue of 1,118 billion yuan, +15.73% year over year. The company increased the cultivation of core dealers, with 20% dealer sales +18.43% year on year; in addition, the number of dealers developing suitable channels reached 1,541 at the end of '23, +33.77% over the same period. The new portion was mainly segmented channel dealers.
Gross profit increased, expenses increased, and non-net interest rates were -0.03pcts year-on-year deducted for the whole year. The company achieved a gross profit margin of 23.70% in '23, +0.29pcts year-on-year, which is mainly expected to be due to an easing on the cost side. In terms of expenses, the 23-year sales/management/R&D/finance expense rates were 4.68%/8.43%/1.11%/0.31%, respectively, +0.76/-0.91/+0.05/+0.20pcts. The year-on-year increase in sales expenses was mainly due to the impact of expanding sales business and increasing investment in online platform promotion. In '23, the non-net interest rate was 6.46% deducted, -0.03pcts year over year.
Investment suggestions: Looking ahead, the bonds between big B-side companies and leading customers have deepened, and the supply category continues to break through; small B-side develops scenarios such as breakfast and group meals to increase product delivery rates and drive sales. The company's revenue for 2024-2026 is expected to be 22.2/27.1/3.25 billion yuan respectively, up 16.9%/21.9%/20.0% year on year, and net profit to mother will be 1.7/2.1/250 million yuan respectively, up 25.2%/22.9%/21.1% year on year; current market value corresponding PE is 21/17/14X, respectively, maintaining the “recommended” rating.
Risk warning: Consumption recovery falls short of expectations, major customer store expansion progress falls short of expectations, sharp rise in raw material prices, food safety issues, etc.