Incidents:
The company released its report for the first quarter of 2024. 2024Q1 achieved revenue of 853 million yuan, an increase of 11.34% year on year; net profit to mother was 176 million yuan, up 37.20% year on year; net profit after deducting non-return to mother was 147 million yuan, an increase of 23.47% year on year. The company's revenue was in line with expectations, and the net interest rate exceeded expectations.
The main business is growing steadily, and the online growth rate is impressive
The company has five major brands, including “Good People”, “Dahongpao”, “Tianwei Food and Catering High-End Customization”, and “Shicuifang”. By product, 2024Q1 Hot Pot Seasoning/Chinese Dish Seasoning/Sausage and Bacon Seasoning achieved revenue of 2.93/4.95/0.33 billion yuan respectively, an increase of 1.18%/17.75%/21.79% over the previous year.
By channel, offline is still the main channel for the company's product sales. The 2024Q1 online channel/offline channel achieved revenue of 132/719 million yuan respectively, with year-on-year growth rates of 101.23%/2.94%, respectively. Looking at the subregions, the central and western regions are the company's dominant markets. 2024Q1 east/southern/west/north/central regions reached 1.56/0.87/3.11/0.80/217 million yuan respectively, with year-on-year growth rates of 6.88%/11.15%/23.35%/8.20%/1.56%, respectively. From the perspective of the number of dealers, there was a net increase of 18 dealers in 2024Q1, with 24 in the western region and a decrease of 18 in the northern region. As of 2024Q1, the number of distributors in the east/ southern/ western/ north/ central regions of the company was 635/438/670/500/940, respectively.
Cost structure optimization, profit level improvement
2024Q1's gross margin was 44.05%, up 3.43pct year on year, and sales expense ratio/management expense ratio/R&D expenses ratio were 17.02%/5.07%/1.05%, respectively, 2.18/-0.83/-0.06pct year on year. 2024Q1's net interest rate increased 4.22pct to 20.90% year on year. Looking forward to the future, the company's profit level is expected to continue to rise as cost reduction and efficiency measures continue to advance.
Profit Forecasts, Valuations, and Ratings
We expect the company's revenue for 2024-2026 to be 36.30/41.75/4.768 billion yuan, respectively, with year-on-year growth rates of 15.29%/15.00%/14.22%, net profit to mother of 581/6.76/787 billion yuan respectively, year-on-year growth rates of 27.32%/16.34%/16.36%, EPS 0.55/0.63/0.74 yuan/share, respectively, and a 3-year CAGR of 19.86%. In view of the company actively expanding the product matrix, promoting channel intensive cultivation and improving efficiency and quality, and referring to comparable company valuations, we gave the company 30 times PE in 2024, with a target price of 16.37 yuan, maintaining a “buy” rating.
Risk warning: risk of product quality and food safety, risk of increased competition, risk of cost fluctuations, etc.