Incident: 2024Q1 achieved total revenue of 1,223 billion yuan, up 37.00% year on year; net profit to mother 160 million yuan, up 43.10% year on year; net profit after deducting non-return to mother was 138 million yuan, up 40.08% year on year.

2024Q1 has maintained impressive growth even at a relatively high base. By channel, we expect volume sales to grow the fastest, mainly due to the increase in the number of downstream stores, the increase in SKUs, and strong consumer demand during the Spring Festival season. E-commerce channels also performed well during the Spring Festival, and the company gradually found more differentiated styles of play.

Net interest rates continued to rise. The gross margin of the 2024Q1 company was 32.1%, -2.5pct year on year. It is expected that due to changes in channel structure, the share of channels with low gross margin will increase. Sales/management/R&D/finance expenses were 13.0%/4.2%/1.3%/0.3%, respectively, -0.8/-0.1/-1.4/-0.0pct. Overall, the cost side continues to be optimized, which is related to scale effects and management efficiency improvements; the R&D cost rate has declined for 2 consecutive quarters. Achieved a net profit margin of 13.1%, +0.5pct year over year.

Omni-channel and multi-category development is rapid, and the company's development plan is clear. The company continues to focus on core categories, continuously optimize the supply chain, upgrade digital and intelligent manufacturing capabilities, steadily improve product strength, and focus on omnichannel strategies. In the future, it will also focus on brand building, build a product matrix, and promote high-quality development.

Investment advice: We expect the company's 2024-2026 revenue to be 51.35/61.99/7.233 billion yuan, +25%/21%/17%; net profit to mother will be 6.45/8.54/1,086 billion yuan, +28%/32%/27% year over year, corresponding PE is 23/17/14X, maintaining a “buy” rating.

Risk warning: Increased competition in the industry, food safety issues, fluctuating raw material costs.