occurrences
On April 28, 2024, Ligao Foods released the 2023 Annual Report and the 2024 First Quarter Report.
Key points of investment
Business gradually improved and profitability improved
The company's total revenue for 2023/2023Q4/2024Q1 was 3.49/9.17/916 million yuan respectively, up 20%/7%/15%, respectively, and net profit to mother was 0.73/-0.85/0.77 billion yuan, respectively, -49%/-297%/+54% year-on-year, respectively. On the profit side, the gross margin of the 2023/2024Q1 company was 31.39%/32.59%, respectively. The gross margin in 2023 was affected by rebate payments from major customers. The increase in 2024Q1 gross margin was mainly due to increased capacity utilization and superimposed procurement strategy optimization; due to the increase in the company's logistics allocation costs/expanded investment in the exhibition, the 2023/2024Q1 sales expense ratio increased by 2 pct/0.2 pct to 13.54%/12.10%, respectively. At 9.56%/6.57%, +1pct, respectively, there is still room for pressure reduction in subsequent management expense ratios. As a result, the 2023/2024Q1 company's net interest rate was 2.02%/8.30%, respectively, and the profitability of 2024Q1 continued to improve. In the dividend plan, the company distributes a cash dividend of 5 yuan for every 10 shares to all shareholders.
Whipped cream performed well, and we expect the capacity utilization rate to continue to rise
In 2023, the company's revenue for frozen baked goods, cream, fruit products, sauce, other baking raw materials, and warehousing and transportation services was
22.11/6.54/1.87/2.33/1.87/0.20 billion yuan, +24%/+28%/-8%/+1145%, respectively. Among them, the sales volume of frozen baked foods/cream/fruit products/sauces was 907/4.63/1.18/20,700 tons, respectively, +19%/+22%/-8%/+25%, respectively.
2.44/1.41/1.59/11,200 yuan/ton, +4%/+5%/-6%, respectively. Frozen baking benefited from the rapid expansion of core supermarkets and catering customers; new products of whipped cream continued to be released. UHT whipped cream was launched in May 2023, and sales revenue exceeded 150 million yuan by 2023. 2024Q1's frozen baked goods revenue is basically flat. UHT cream drove revenue in the cream sector to double year-on-year. Subsequent, on the one hand, the company upgraded the quality of old products, and on the other hand, improved the quality of new products on the market. As production capacity utilization increases, the profitability of the company's products will gradually increase.
The distribution channel performance is steady, and major catering customers continue to develop
In 2023, the company's distribution/ direct sales/ retail/ other channel revenue was 19.71/14.89/0.13/20 billion yuan, respectively, compared with +4%/+49%/-22%/+1145%, of which distribution channel revenue was basically the same; supermarket channel revenue increased by about 50%, mainly due to the reasonable structural gradient of new and old products in core supermarkets, showing steady growth; revenue from tea, catering and new retail channels doubled year-on-year, mainly due to the company's active layout of new channels and continuous development of leading catering customers. 2024Q1's revenue from the bakery distribution channel also increased by 25%, mainly driven by new cream products; the supermarket channel was affected by the Spring Festival return and high base, and revenue declined in single digits over the same period last year; direct supply chain customers and restaurant dealers all maintained a relatively rapid growth trend. With the development of major customers and the release of whipped cream, the expansion of various channels is expected to continue to progress steadily.
Profit forecasting
The company updates its business strategy in a timely manner based on market performance. Product/channel play ideas are gradually clarified, and the profit side continues to recover. As production capacity climbs and market demand recovers, the company's profit-side flexibility is expected to be further unleashed. According to the annual report and quarterly report, EPS for 2024-2026 is expected to be 0.93/1.34/1.87 yuan, respectively, and the current stock price is 38/27/19 times PE, respectively, maintaining a “buy” investment rating.
Risk warning
Macroeconomic downside risks, rising raw material costs, new product promotion falls short of expectations, and demand recovery falls short of expectations.