Incident: The company released its 2023 report and 2024 quarterly report. In 2023, it achieved revenue of 1.9 billion yuan, +27.7%; realized net profit of 130 million yuan, +31.8% year over year; of these, 23Q4 achieved revenue of 5.7 yuan, +25% year over year, and realized net profit of 40 million yuan, or +24.1% year over year; at the same time, the company plans to distribute a cash dividend of 1.90 yuan (tax included) for every 10 shares to all shareholders. The 24Q1 company achieved revenue of 460 million yuan, +8% year-on-year, and achieved net profit of 35 million yuan, +14.2% year-on-year; the company's performance was in line with market expectations.
Q1 Revenue was slightly pressured, and the main business maintained high growth throughout the year. 24Q1 achieved revenue of 480 million yuan, +8% over the same period. The Q1 revenue growth rate slowed down, mainly due to weak overall catering demand since the beginning of the year and adjustments in the strategies of some major customers themselves. By product, in 2023, the company's deep-fried, baking/cooking/cooking products achieved revenue of 8.7/3.6/3.7/290 million yuan respectively, +24.2%/+26.4%/+38.6% year-on-year. Among them, the fast growth rate of cooking products was mainly due to the rapid release of steamed dumplings and prepared food products, while other main products maintained a relatively rapid growth rate. By channel, the company's direct marketing/distribution channels achieved revenue of 11.2 billion yuan in 2023, +15.7%/+49.9% year on year; Big B's direct sales channel achieved high growth mainly due to a high base in the first half of the year, compounded by the company's strengthened customer service efforts; the growth rate of the small B channel was affected by changes in the overall social catering environment, and the growth rate slowed down. The company continues to increase support for core dealers. By 2023, 20% dealer sales were +18.43% year-on-year, which is superior to the overall growth rate of distribution channels. By the end of '23, the number of the company's dealers had a net increase of 389 to 1,541.
Gross margin has increased steadily, leading to an increase in profitability. The company's gross margin in 2023 was 25.5%, +0.3pp; of these, 24Q1 gross margin was 25.5%, +1.5pp year over year. The increase in gross margin was mainly due to an increase in product structure and a decline in raw material costs. In terms of cost ratio, the company's sales expenses ratio in 2023/24Q1 was 4.7%/5.9%, respectively, +0.76pp/+0.81pp; this is mainly due to the company increasing offline channel marketing and online promotion expenses. The 2023/24Q1 management fee rate was 8.4%/8.4%, respectively, -0.9pp/+0.5pp year-on-year, respectively.
Taken together, the company's 2023/24Q1 net profit margin was +0.2pp/+0.5pp to 7.4%/7.4%, respectively.
Big B+small B two-wheel drive, business potential continues to increase. Looking forward to the future: 1) On the Big B side, the company continues to strengthen new product development and service efforts for core major customers. The number of major customer stores continues to grow, and the number of customers in stock is expected to maintain a high level of growth. In addition, the company is also actively expanding new Big B customers, continuing to increase revenue through category expansion. 2) On the small B side, the company will continue to support key dealers to grow bigger and stronger. On the one hand, it empowers dealers to help them improve their management capabilities, and on the other hand, works with dealers to develop new channels such as group meals and breakfast. As social catering demand gradually recovers, channels such as group meals and country cooking are expected to accelerate growth. Little B side is expected to become an important engine driving the company's revenue growth this year. As a leading enterprise in the catering supply chain, the company has formed solid barriers in terms of production capacity and scale effects. As the company continues to explore demand and explore emerging opportunities in the food supply industry, long-term performance is expected to maintain high growth.
Profit forecasting and investment advice. The company's 2024-2026 EPS is expected to be 1.68 yuan, 2.09 yuan, and 2.60 yuan respectively, and the corresponding dynamic PE will be 21 times, 17 times, and 14 times, respectively, giving a “holding” rating.
Risk warning. New product promotion or failure to meet expectations; risk of large fluctuations in raw material prices; food safety risk.