Key points of investment

Performance situation:

In 2023, the company achieved revenue of 3.21 billion yuan (+31.6% year over year), net profit of 540 million yuan (YoY +54.2%); Single Q4 achieved revenue of 800 million yuan (-0.8% YoY) and net profit of 140 million yuan (-8.5% YoY); 24Q1 achieved revenue of 890 million yuan (+9.3% YoY) and net profit of 150 million yuan (YoY +6.7%).

Revenue side: The company's revenue has achieved high growth, and the product structure and channel structure have all performed well. Specifically:

1) Highlight 1: Zero soy sauce continues to be released, and the product structure continues to improve. In '23, the soy sauce/vinegar category achieved revenue of 2.04 billion yuan/420 million, respectively, +34.8%/+11.7% year over year; the 24Q1 soy sauce/vinegar category achieved revenue of 570 million/110 million, +9.1%/-6.2%, respectively. Judging from the product structure, benefiting from the zero-additive soy sauce development trend in the industry, the company's soy sauce products performed very well.

2) Highlight 2: The expansion rate of traditional channels is unabated, and the increase in the share of traditional channels is driving high growth in the foreign port market.

Looking at the market structure, the western base market revenue was +23.8% year-on-year, and traditional channels continued to be cultivated; the foreign port market performed well. In '23, the company continued to accelerate traditional channel investment and distribution. Among them, East/South/Central/North revenue was +30.9%/+26.0%/+81.0%/+27.1%, respectively.

Profit side: shrinking company expenses, leading to improved profitability

—Gross profit margin: 23-year/24Q1 gross margin was 37.1%/36.0% (+0.6pct/-3.1 pct year-on-year); —Net profit margin: 23/24Q1, the company achieved a net interest rate of 16.5%/17.3% to mother (+2.4pct/-0.4pct year-on-year). In 23, the company's sales/management/R&D/finance cost rates were -1.4pct/+0.9pct/ year-on-year flat/-0.5pct, respectively, and 24Q1 companies' sales/management/R&D/finance expense ratios were +0.1pct/-0.9pct/-0.2pct/-1.1pct, and the efficiency of cost usage continued to improve.

The zero-additive category is expected to continue to grow at a high rate. The company's long-term growth path is clear in the medium to long term. The company's channel strategy in different regions of the country adapts to local conditions, the mature market continues to cultivate channels intensively, and new traditional channels continue to be developed. We believe that the company continues to enrich its channel structure, improve operational efficiency and channel competitiveness, and that there is still plenty of room for channel expansion and decline in the future.

Profit forecasting and valuation

The company's 24-26 revenue growth rate is expected to be 16.50%/14.90%/14.00%, respectively, the net profit growth rate to mother will be 18.87%/20.37%/20.04%, and PE will be 28/23/19 times, respectively, maintaining the “increase” rating.

Risk warning

Sales of zero-additive products fell short of expectations, and channel development fell short of expectations.