Description of the event
The company disclosed its 2023 annual report and 2024 quarterly report. In 2023, the company's revenue was 14.05 billion yuan, up 15.29% year on year; net profit to mother was 1.48 billion yuan, up 34.24% year on year; after deducting non-net profit of 1.365 billion yuan, up 36.8% year on year. In 2024, Q1 revenue was 3.755 billion yuan, up 17.67% year on year; net profit to mother was 438 million yuan, up 21.24% year on year; net profit after deducting non-net profit was 420 million yuan, up 21.56% year on year.
Incident comments
The rapid growth of the prepared food business combined with diversification of the main business channels led to steady growth on the company's revenue side: in 2023, the company's revenue was 14.05 billion yuan, up 15.3% year on year, and the annual revenue of noodle products/meat products/surimi products/dish products changed +5.4%/+11.76%/+29.84% year on year. The gradual recovery of the restaurant side has driven the company's revenue from traditional hot pot products back to a normal growth trajectory. The revenue base for noodle and rice products remains stable, and the overall revenue growth of the dish business is still steady. . Revenue from 2024Q1 noodle products/meat products/surimi products/dish products changed by +4.42%/+27.73%/+31.48%/+12.27%, respectively. The hot pot ingredients business benefited from a lower base and the flexibility to repair the consumption scenario; the rapid growth of hot pot products led to impressive growth in the company's main business. Looking at revenue by channel for the full year of 2023, the company's distribution channel/supermarket channel/e-commerce channel/new retail channel revenue changes respectively: +15.96%/-13.42%/+28.88%/+145.92%/-0.32%; 2024Q1 company distribution/supermarket/e-commerce /new retail showed year-on-year changes of +22.61%/-6.28%/+0.02%/+35.61%/-8.27%. The continued decline in supermarket channels is mainly related to the decline in passenger flow and the closure of some partner stores. Throughout the year, the company continued to increase the decline in distribution channels and diversified channel layout. The number of dealers increased net by 29 in 2024Q1 to 1993, and emerging social e-commerce channels such as Douyin Kuaishou also began to expand rapidly.
In the context of gradual cost improvement, the efficiency of fee control is still remarkable. In 2023, the company's gross margin increased by 1.25 pct to 23.21% year on year, mainly due to a steady decline in costs such as surimi meat and an increase in sales share of high-margin products in the main business. The cost rate decreased by 0.76pct to 9.36% during the year, with detailed year-on-year changes: sales expense ratio (-0.57pct), management expense ratio (-0.07pct), and financial expense ratio (-0.02pct); the company continued to optimize efficiency throughout the year, so that the company's net mother profit margin increased throughout the year 1.49pct to 10.52%. In the context of cost improvement, the company achieved remarkable results in controlling fees and improving efficiency. 2024Q1's gross margin increased by 1.85 pct to 26.55%, which is mainly due to cost side optimization and the scale effect of hot pot products; the cost ratio increased by 0.55 pct to 10.68% during the period, with year-on-year changes in details: sales expense ratio (+0.09pct), management cost rate (+0.3 pct), R&D cost rate (-0.01pct), financial cost ratio (+0.16pct). Although there is a slight increase in the cost side, the company is expected to have stable profitability due to better sales of high Maori surimi products such as Fresh Pack and Pun Supreme Improved, net profit margin increased by 0.34pct to 11.68%.
Looking ahead to the whole year, surimi paste and meat costs on the company's cost side may rebound in the second half of the year, but the overall cost is expected to be manageable. On the business side, due to catering restoration and the company's continued decline and diversified channel construction, the company's main business revenue side is expected to improve steadily in the procyclical period, and is expected to continue to grow steadily throughout the year; prepared dishes are expected to continue to perform well in the face of the times.
On the profit side, as overall cost control is gradually put in place, the company continues to improve cost investment efficiency, the conversion rate is expected to gradually increase, and the company's overall profitability will continue to be released. The company's 2024-2025 EPS is expected to be 5.82/6.99 yuan respectively, corresponding PE is 16/14 times, respectively. The company's dividend level in 2023 will reach around 53%, maintaining a “buy” rating.
Risk warning
1. The cost of raw materials continues to rise;
2. Food safety issues and increased industry competition, etc.