24Q1 revenue +15.72% YoY. The company's revenue in '23 was 2,369 million yuan, +16.31% year-on-year, net profit to mother was 301 million yuan, +39.78% year-on-year, and net profit after deducting net profit of 219 million yuan, +12.92% year-on-year. Net operating cash flow of $166 million in '23 was -34.01% year-on-year, mainly due to shorter procurement payment cycles and increased stocking. It is proposed to distribute a cash dividend of 3.75 yuan (tax included) for every 10 shares in '23.

The 24Q1 company's revenue was 624 million yuan, +15.72% year on year, net profit to mother was 61 million yuan, -20.36% year on year, net profit after deducting 52 million yuan, -7.04% year on year.

24Q1 gross margin is still under pressure. The company's gross margin in '23 was 33.14%, -1.43pct year on year, mainly due to a significant decrease in gross margin of compound seasonings; sales expenses rate/ 4.78%/-0.13%, respectively, -0.61pct/-0.21pct/-0.12pct year on year; net profit margin after deduction was 9.25%, -0.28pct year on year. The gross margin of the 24Q1 company was 32.04%, -3.05pct; sales expenses ratio/management expense ratio/financial expense ratios were 14.85%/4.3%/-0.18%, respectively, -1.24pct/-0.39pct/+0.08pct, respectively. The net profit margin after deduction was 8.39%, or -2.05pct year-on-year.

24Q1 Compound Seasoning Revenue +27.7% YoY. In terms of B-side products, the number of products developed in the past three years is close to 60%; C-end brands have introduced new pasta flavors, and the youth version of the pasta series has been updated one after another, adding “Thai Spicy Dongyin Gong” and “Spicy Crayfish” flavors, and the classic tomato bolognese pasta has been completely upgraded to the 290g version; in terms of product categories, it has entered the baking circuit, and product boundaries have continued to break through.

The revenue of each product in '23 was 1,145 million yuan/ +29.32% for compound seasonings, 1,024 million yuan/ +1.39% for light cooking solutions, and 143 million yuan/ +8.28% for beverage and dessert ingredients, respectively. 24Q1 product revenue/yoy was 304 million yuan/ +27.7% for compound seasonings, 267 million yuan/ +5.76% for light cooking solutions, and 35 million yuan/ +0.56% for beverage and dessert ingredients, respectively.

24Q1 direct sales revenue +16.05% YoY. By channel, the revenue/growth rate of each channel in '23 was 1,903 billion yuan/ +12.81% for direct sales and 408 million yuan/ +20.17% for non-direct sales, respectively. The revenue/growth rate of each channel in 24Q1 was 507 million yuan/ +16.05% for direct sales and 99 million yuan/ +12.01% for non-direct sales, respectively. At the end of 24Q1, the number of dealers reached 387, a net increase of 5 over the previous month.

Profit forecasting and valuation. We expect the company's 24-26 EPS to be 0.72/0.82/0.93 yuan, respectively. The relevant comparable company's 24-year PE is 22-34 times. Considering the high prosperity of the industry, a certain valuation premium will be given, 25-30 times PE for 24 years, corresponding to a reasonable value range of 18-21.6 yuan, and a “superior to the market” rating.

Risk warning. The impact of price fluctuations in upstream raw materials, increased competition in the industry, etc.