Key points of investment
Event: The company released the 2023 Annual Report & 2024 Quarterly Report:
2023: Achieved revenue of 1,901 million 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.
2024Q1: Achieved revenue of 463 million yuan, +8.04% year on year; net profit to mother of 35 million yuan, +14.16% year over year; deducted non-net profit of 34 million yuan, or 14.05% year on year.
2023 came to a successful conclusion, with 2024Q1's B-side revenue under pressure.
1) By sales model: In '23, distribution/direct management achieved revenue of 1,118/775 million yuan respectively, +15.73%/+49.89% year-on-year, respectively. The largest customer achieved 68% revenue growth, and the low base+Yum's rapid recovery in 2023 led to high revenue growth. The growth rate of the 2024Q1 small B/big B is expected to be +15%/-10%, respectively. The short-term pressure of Big B is mainly due to the double-digit year-on-year decline of the largest customer. The short-term pressure is mainly due to the short-term pressure: 1) the largest downstream customer Q1 has some pressure on the same store; 2) the largest customer diversifies suppliers, increasing demand for cost reduction and efficiency, and increased competition has squeezed the company's existing individual products to a certain extent; 3) Some single products declined during the same period this year due to the high base of promotions in Q1 last year.
Q1 Revenue is weak and profitability has increased, and it is expected that they will respond more actively to competition in the future.
The company achieved a net interest rate of 7.06% in '23, +0.22pct year on year, 6.46% net interest rate on non-return to mother, and -0.01pct year on year. The gross profit margin was 23.7% in '23, +0.29pct year on year, and the sales/management/R&D/finance expenses ratio was 4.68%/8.43%/1.11%/0.31%, respectively, and +0.76/-0.91/+0.05/+0.20pct year on year, and profitability remained steady.
Net profit margin for 24Q1 was 7.46%, +0.40pct year on year; net margin without return was 7.27%, +0.38pct year on year; gross profit margin 25.45%, +1.49pct year on year; sales expenses ratio 5.89%, gross sales difference 19.56%, year on year +0.68pct year on year. The management/R&D/finance cost rates were 8.35%/1.06%/-0.13%, respectively, +0.53/+0.24/-0.37pct. The 24Q1 external environment is complex and competition is fierce. The company maintains profit margins while the revenue side is slightly weak. It is expected that in the future, the company will adjust and respond more actively to balance profit and revenue, ensure stable profit margins, and accelerate revenue growth.
Profit forecast and investment rating: The company focuses on serving B-side catering customers, and is optimistic that the company will continue to grow under strong R&D and customer advantages. Considering the pressure on the company's big B, we lowered our 2024-2025 profit forecast and added the 2026 profit forecast. The company's revenue for 2024-2026 is 21.9/26.1/3.09 billion yuan respectively (the previous forecast was 23.3/28.01 billion yuan for 2024-2025), the year-on-year growth rate is +15.2%/19.0%/18.5%, and the net profit to mother is 1.8/2.2/260 million yuan (previously estimated 2024-2025 is 21/260 million yuan), +31% year-on-year /22%/20%, EPS was 1.78/2.17/2.61 yuan respectively, and the corresponding PE was 20x, 17x, and 14x, respectively, maintaining the “buy” rating.
Risk warning: Food safety risk, raw material price fluctuation risk, risk of increased market competition, risk of unstable performance due to high revenue share of major customers.