Incidents:
The company held the 2023 Annual General Meeting of Shareholders in Chengde, Hebei on May 15, 2024.
Comment:
The base in the northern region is stable, and channel sinking continues to eliminate the gap market; the company has been developing in the northern region for a long time, and the consumer base is stable. In 2023, the company's northern region accounted for 90.57% of revenue.
The company continues to eliminate empty markets, designate sales personnel to go deep into communities and townships, and promote channel sinking. At the same time, it has expanded publicity through specific measures such as WeChat group activities and rural activities, and achieved steady growth in the northern region. The company still has plenty of room for development in Beijing, Heilongjiang, Jilin, etc., and will continue to contribute more after major breakthroughs in the future.
The Southern Market focuses on East China and Southwest China, focusing on developing a low-sugar version of almond syrup. The company added two major regions of East China and South China and an e-commerce operation center in the south. Starting in 2023, the company will mainly develop markets in East China such as Shanghai, Anhui, Jiangsu, and Zhejiang, while the southwest mainly focuses on Chongqing and Chengdu. The Southern Market focuses on developing low-sugar almond syrup. Almond milk is sold in both the northern and southern regions. Currently, the company is committed to increasing consumer trust. For the time being, the new products are mainly online, and offline channels are not yet full.
Product replacement and new product development cater to young consumers, and new media marketing will be strengthened in 2024. The main consumer group of the company's products is middle-aged and elderly people, and the marketing of existing classic products will be upgraded in the future. The packaging format has expanded from three-piece cans in the past to two-piece cans and PET bottles. Product development caters to the aesthetics, tastes, and consumer needs of young people. In addition to continuing traditional bus, cinema, and TV commercials, in 2024, concentrated investment in new media or live e-commerce platforms such as Xiaohongshu and Douyin will be strengthened to gradually include young people in the consumer group.
Equity incentives and employee stock ownership plans increase motivation within the company. The company's equity incentive plan was officially implemented on April 17, 2024. Based on the completion of the 2024-2026 annual results, the sales restriction ratio was confirmed. The revenue assessment accounted for 60% and the profit assessment accounted for 40%. On April 25, the first shareholders' meeting of the employee stock ownership plan was held. Equity incentives and employee stock ownership plans help enhance the company's internal enthusiasm and promote continued growth in performance.
Investment suggestions: The northern market base is stable, the southern market is focused on expansion, equity incentives and employee shareholding enhance the company's cohesion. The company's net profit from 2024-2026 is expected to be 6.73/7.20/781 billion yuan, EPS is 0.64/0.68/0.74 yuan, corresponding PE is 15x/14x/13x, which is covered for the first time, giving the company a “buy” rating.
Risk warning: New product sales fall short of expectations, regional expansion falls short of expectations, raw material prices fluctuate