On April 28, 2024, the League of Nations Fisheries released the 2023 Annual Report and the 2024 First Quarter Report.
Key points of investment
Inventory impairment dragged down gross profit, and net interest rates stabilized marginally
The company's total revenue for 2023/2023Q4/2024Q1 was 4.909/9.37/1,043 billion yuan, respectively, down 4%/20%/26% year on year, net profit to mother was -5.32/-2.97/0.04 billion yuan respectively, and -06 billion yuan/2024Q4 was -0.58 billion yuan/66% decrease in 2023. The loss occurred mainly due to the decline in domestic prices of aquatic products such as South American white prawns. The company's inventory asset impairment losses increased year-on-year, compounded by the US subsidiary SSC Caused by large losses. On the profit side, the gross margin of the 2023/2024Q1 company was -6pct/+6pct to 6.71%/16.23% year over year, respectively. The 2024Q1 gross margin increase is expected to be due to an increase in the revenue share of high-margin prepared dishes and optimized product structure. The sales expense ratio was -0.2pct/+2pct to 4.67%/5.18% year over year, respectively, and the management expense ratio increased by 0.1 pct/0.1 pct to 2.79%/2.64%, respectively. Taken together, the 2023/2024Q1 company's net profit margin was relatively stable; taken together, the 2023/2024Q1 company's net interest rate was -11.02%/-0.17%, the same decrease of 11pct/1pct, respectively, and the margin of net interest stabilized.
The prepared food sector is developing steadily, and domestic and foreign customers continue to develop
By product, the company's revenue for aquatic food/feed/other products in 2023 was 46.10/2.63 billion yuan, respectively, -5%/+31%/-58% year-on-year, respectively. The fishery industry is affected by the macroeconomic situation at home and abroad and changes in downstream market demand. Markets such as South American white prawns and crayfish continued to be sluggish, and product sales prices fell. Thanks to the company's sales volume of large single products such as crayfish/grilled fish/sauerkraut fish/bullfrog, the company achieved revenue of 1,157 billion yuan in 2023 (same increase of 2%) and maintained a steady development trend. Among them, the company fully empowered the ecosystem and marketing frontline for new bullfrog products, and has now successfully integrated them into important Chinese and Western catering channels in China. As the company continues to promote products using the collaborative advantages of fishery products, the competitiveness of the prepared dishes sector is expected to continue to strengthen. Looking at the subregion, the company's domestic/foreign revenue in 2023 was 27.76/2,133 billion yuan respectively, +13%/-20%, respectively. The company continues to consolidate its advantages in catering channels domestically, deepen strategic cooperation with Hema, and strengthen the development of new overseas markets. As the share of Chinese and Western prepared food products increases in international channels, the company's profitability is expected to continue to increase.
Profit forecasting
The company's fishery food sector was affected by market conditions, and the company used fishery collaboration advantages to upgrade its business model. Some large single products showed a clear trend in volume. Under pressure from the main business, the high-margin prepared dishes sector continued to grow steadily, contributing to a new driving force for performance. As the company deepens its advantages in the catering channel and opens up overseas markets, performance is expected to rise steadily. According to the annual report and quarterly report, EPS is expected to be 0.02/0.08/0.11 yuan respectively in 2024-2026, and the current stock price is 206/42/30 times PE, respectively , maintaining a “buy” investment rating.
Risk warning
Macroeconomic downside risks, increased market competition risks, prepared dishes falling short of expectations, risk of rising raw material prices, etc.