The company achieved revenue of 8,046 billion yuan/ -14.76% in 2023, net profit of 180 million yuan/ -46.26%, after deducting net profit of 65 million yuan/ -68.82%. Looking at a single quarter, 23Q4 achieved revenue of 2,046 billion yuan/ -16.02%, and net profit to mother of -111 million yuan/48 million yuan in the same period last year. 24Q1 achieved revenue of 2,451 million yuan/ +2.79% in a single quarter, net profit attributable to mother 62 million yuan/ -57.98%, and net profit of 55 million yuan/ -48.69% after deducting non-attributable net profit. The company began transformation in 23 and released a new brand value proposition “Natural Health New Snacks” in 2024, which will focus on product differentiation and more clear value transmission. It is expected that the brand, product, and channel will be actively adjusted in multiple dimensions to maintain the “gain” rating.
The company is in a transition period, and the profit side is under pressure in the short term. The company achieved revenue of 8,046 billion yuan/ -14.76% in 2023, net profit of 180 million yuan/ -46.26%, after deducting net profit of 65 million yuan/ -68.82%. Looking at a single quarter, 23Q4 achieved revenue of 2,046 billion yuan/ -16.02%, and net profit to mother of -11 million yuan/48 million yuan in the same period last year. 24Q1 achieved revenue of 2,451 billion yuan/ +2.79%, net profit attributable to mother of 62 million yuan/ -57.98%, and net profit of 55 million yuan/ -48.69% after deducting non-return to mother.
The growth rate of all channels improved in 24Q1, and group buying performance was outstanding. By channel, the company's revenue in 2023 was 31.67/24.0/18.94/490 million, respectively, -32.58%/-6.67%/+21.69%/-0.51%; 24Q1 e-commerce, franchise/direct retail/group purchase revenue was 12.86/6.37/6.40/182 million yuan, respectively, +6.65%/-16.0%/+10.16%/+57.32%.
The store structure continues to be adjusted, focusing on improving the performance of individual stores. In terms of stores, the company opened 455/224 new direct-managed/franchised stores in 2023, reducing the number of direct-managed/franchised stores by 197/415, and increasing the net number of direct-managed/franchised stores by 258/191. By the end of '23, the number of direct-managed/franchised stores was 1256/2037, respectively. The 24Q1 company opened 55 new stores and closed 195 stores, a net reduction of 140 stores. As of the end of 24Q1, the total number of company stores was 3153.
Gross margin was stable, and net profit margin declined. In 2023, the company's gross margin was 27.75% /+0.18pct, and the net profit margin was 2.23% /-1.31pct. In 2023, the company's financial expenses rate was -0.14% /+0.24pct, management expenses were 5.55% /+0.47pct, sales expenses were 19.55% /+0.94pct, and R&D expenses rate was 0.54% /+0.01pct.
Investment advice. The company began transformation in 2023 and released a new brand value proposition “Natural Health New Snacks” in 2024. It will focus on product differentiation and innovation and more clear value transmission. It is expected that multiple dimensions of the brand, product, and channel will be actively adjusted. We expect the company's net profit to be 2.0/26/3.1 billion yuan in 2024-2026, respectively, maintaining the “increase in holdings” rating.
Risk warning: Single store performance falls short of expectations, industry competition intensifies, food safety risks