24Q1 performance split: The company achieved operating income of 334 million yuan (-3.17% year over year); net profit to mother of 57 million yuan (-3.79% year over year), net profit of non-return to mother of 59 million yuan (+1.65% year over year).
Q1 Traditional channels are still under pressure, and the East China region is performing better than others.
1) By business, revenue from dairy drinks/other products in 24Q1 was 324/0.09 million yuan, respectively, -4.37%/+77.47% year-on-year.
2) By sales model, 24Q1 distribution/direct sales channel revenue was 326/0.07 million yuan, respectively, -3.52%/+14.08% year-on-year.
3) Looking at the subregions, in 24Q1, East China, Central China, Southwest China, South China, Northeast China, and Northwest China were 1.69/0.66/0.62/0.05/0.18/0.02/0.02 billion yuan, respectively, +1.75%/-14.74%/-12.37%/-12.37%/-10.80%/-43.38%/-32.64%; the East China core region performed better than other regions. The revenue share of the East China/Central China/Southwest China market was 51%/20%/19%, respectively. In 24Q1, the number of the company's dealers increased by 203, a net increase of 42 to 2,627. The number of dealers in East China/Central China/Southwest/South China increased net by 15/14/13/13 in 24Q1. Traditional distribution channels made up for shortcomings, focusing on breakfast, small meals, etc.
The deducted non-net interest rate increased, and the gross sales margin was clearly optimized.
24Q1 deducted non-net interest rate +0.8 pct year over year, including: 1) gross margin +1.6 pct to 38.2% year over year; 2) sales rate -0.9 pct year over year; 3) management rate +2.1 pct year over year.
We believe that 24 will be a year of channel optimization and reform. Retail sales will actively participate, focusing on exploring breakfast and small meals; in the future, traditional e-commerce channels will be refined and the focus will be on expanding the sales market for new products.
Profit forecast: Combined with the annual report and quarterly report, and considering the overall consumption environment, we lowered the 24-25 revenue & profit forecast values. We expect the company's revenue growth rates to be 11%/12%/14% for 24-26 (amount 15.7/17.6/2.0 billion yuan, 24-25 million yuan ago), and 11%/13%/15% (amount 2.6/340 million yuan, 24-25 million yuan ago), respectively (amount 2.6/3.40 billion yuan, 24-25 million yuan ago). The corresponding PE is 20X/17X/15X, maintaining the “Overweight” rating.
Risk warning: Demand from traditional channels has weakened beyond expectations, investment progress has fallen short of expectations, raw material costs have risen too fast, and competition in regional markets has intensified.