Incidents. The company disclosed its 2023 annual report on April 25. In '23, the company achieved operating income of 1,578 million yuan (YOY = 18.89%) and net profit to mother of 115 million yuan (YOY = 6.13%). In the first quarter of '24, we achieved revenue of 566 million yuan (YOY = 46.07%) and realized net profit of 45 million yuan (YOY = 14.59%). Additionally, the company's dividend for 23 years was $0.52 per share.
Stable performance in '23, with rapid growth in the first quarter of '24. In '23, the company achieved operating income of 1,578 million yuan (YOY = 18.89%), gross margin increased 1.44pct to 44.55% year over year, and gross profit increased 22.87% year over year to 703 million yuan. In addition, the company's expense ratio increased by 1.61 pct to 37.07% year on year (of which the sales expense ratio increased by 1.78 pct year on year, management expense ratio decreased by 0.20 pct year on year, and R&D expenses increased by 0.03 pct year on year). In addition, the income tax rate increased by 3.09 pct year on year, so the net profit margin to mother increased 6.13% year over year to 115 million yuan, corresponding to a decrease of 0.88 pct to 7.32% year on year.
Looking at 24Q1, the company's revenue increased 46.07% year on year. In addition, gross margin increased 43.71% year on year, so gross profit increased 50.48% year on year. In addition, the overall cost ratio increased by 3.68 pct during the period (sales expenses increased by 4.07 pct, management expenses decreased by 0.55 pct, and R&D expenses decreased by 0.08 pct). Furthermore, the income tax rate decreased by 3.50 pct year on year, so net profit to mother increased by 14.59% year on year (corresponding net profit margin decreased by 2.19 pct year on year).
Oat+ grew rapidly, and sales of probiotic protein powder exceeded 10 million. By product in 2023: (1) Pure oatmeal achieved revenue of 644 million yuan (YOY +4.00%) in '23, while gross margin increased 0.73 pct year-on-year.
(2) Compound Oatmeal achieved revenue of 661 million yuan (YOY +33.76%) in '23, while gross margin increased by 3.43 pct year-on-year. Among them, star products such as organic, milk oats, and oat+ series grew steadily. The oat+ series increased by more than 30% year on year; powder products increased by more than 80% year on year; probiotic protein powder was only 4 months on the market, with sales exceeding 10 million yuan. (3) In '23, cold oatmeal achieved revenue of 1,199 billion yuan (YOY +21.99%), while gross margin increased 2.69 pct year over year.
In '23, the company operated in detail according to the characteristics of different channels, focusing on developing snack channels, etc., to activate the sales potential of each channel, achieve high-quality business growth, and further consolidate the competitive advantage of offline channels. Continuously enhance the advantages of KA and AB supermarkets. According to data from the National Chain Store and Supermarket Information Network, in the face of a year-on-year decline in sales in large supermarkets across the country, the company achieved results in bucking the trend in this channel and increasing the region.
In '23, the company's offline business increased by more than 10% year on year, and snack channel sales increased by more than 180% year on year.
Looking at specific channels: 1) The direct management model achieved revenue of 632 million yuan (YOY 28.06%), and the gross margin increased by 3.74 pcts year on year; 2) the distribution model achieved revenue of 903 million yuan (YOY 11.24%), and the gross margin increased 1.71 pct year over year.
Profit forecasting and investment advice. We expect the company's revenue for 2024-2026 to be 19.67/23.78/2,782 billion yuan, respectively, and net profit to mother of 140/1.80/221 million yuan, respectively, and corresponding EPS of 0.63/0.81/0.99 yuan/share, respectively. Combined with comparable company valuations, the company was given a PE valuation of 20-25 times in 2024, corresponding to a reasonable value range of 12.60-15.75 yuan/share, continuing to be given a “superior to the market” rating.
Risk warning. (1) Food safety risks, (2) market competition has intensified, and (3) the expansion of new products and channels has fallen short of expectations.