Incident: The company released its 2024 quarterly report. In 2024, Q1 achieved revenue of 160 million yuan, -6.5% year on year; realized net profit of 0.2 billion yuan, up 28.3% year on year; deducted non-net profit of 0.2 billion yuan, up 29% year on year.
The OEM and distribution business has reached an inflection point. By product, the company's foundry business/independent brand business achieved revenue of 37.82 million yuan/120 million yuan respectively, and the foundry business showed a clear recovery with the recovery of inventory levels of major customers; among the independent brands, Beiding China/Beiding Overseas achieved revenue of 110 million yuan/11.72 million yuan respectively, respectively, -17.3%/+28.2% year-on-year, respectively. Among them, Beiding Overseas switched to a distribution model in 2022. With the gradual improvement and development of overseas channels, the revenue side began to show an obvious inflection point in Q1 2024.
Changes in the revenue structure have put pressure on gross margins, and the cost control effect is remarkable. In terms of profitability, the company's gross margin ranged from -2pp to 49.7% year-on-year. We estimate that this was mainly due to the relatively low gross margin of the OEM business and distribution business, and the rapid increase in share had a structural impact on gross margin. In terms of cost rates, the company strengthened the control of various expenses. The sales expense ratio was 23.6%, -3.3pp year on year, and the fee reduction effect was obvious; the management expense ratio was 10.2%, 0pp year on year; financial expenses ratio was -1%, -1.2pp year on year; and R&D expenses rate was 6.1%, -0.5pp year on year.
Taken together, the company's net interest rate was 14.2%, an increase of 3.8PP over the previous year, and the fee control effect was obvious.
Overseas development is progressing steadily, and domestic channel reforms are actively seeking change. In 2024, Q1's overseas market grew significantly, mainly due to the continuous overseas channel side expansion in the early stages. Furthermore, the company actively designed and developed new products for overseas markets, and is expected to positively catalyze revenue and profitability on the basis of channel improvement with subsequent mass production. Looking at the domestic market, the company is actively reforming channel cost investment, boosting offline channel expansion, and the fee control effect is remarkable. It is expected that demand will pick up in the future, and it is expected that it will return to the growth trajectory.
Profit forecasting and investment advice. The company focuses on improved dietary needs and provides high-quality products and services through its own brand “Beiding BUYDEEM” and OEM/ODM business. The results of the channel reforms carried out in the early stages are expected to be unleashed. The company's 2024-2026 EPS is expected to be 0.28 yuan, 0.35 yuan, and 0.40 yuan respectively, maintaining the “hold” rating.
Risk warning: risks such as price fluctuations of major raw materials, increased market competition, and exchange rate fluctuations.