The company released its 2023 annual report and 2024 quarterly report: in 2023, the company achieved operating income of 1,411 million yuan, a year-on-year decrease of 18.51%; realized net profit of -0.11 million yuan, compared with 127 million yuan in 2022; realized net profit after deduction of -0.07 billion yuan, compared to 135 million yuan in 2022. 2023Q4 achieved revenue of 495 million yuan, an increase of 31.18% over the previous year; realized net profit of 0.18 million yuan, 2022Q4 of -031 million yuan; realized net profit of 24 million yuan after deduction, and 2022Q4 was -0.28 billion yuan. In 2024Q1, the company achieved revenue of 384 million yuan, an increase of 142.37% over the previous year; realized net profit of 42 million yuan, 2023Q1 of -0.38 million yuan; realized net profit of 40 million yuan after deduction, and 2023Q1 of -39 million yuan.
Main food and wet food products performed well, boosting the revenue scale of independent brands: 1) Main food and wet food products:
In 2023, the company's business achieved revenue of 210 million yuan, an increase of 31.33% over the previous year. The company created a number of best-selling products in the terminal market, such as dried duck meat and canned Haoshijia (98K) wet food, which promoted the rapid increase in revenue scale and brand exposure of its own brands, and helped the revenue of staple food and wet food products to continue to grow; 2) Pet food and other products: In 2023, the revenue of animal skin chewing gum, vegetable chewing gum, and nutritious meat snacks was 4.24, 4.23, and 318 million yuan, respectively, -22.11%, -34.84%, and -5.72%.
Foreign market revenue was affected by inventory removal, and domestic market revenue continued to grow: 1) Overseas: Achieved revenue of 1,062 billion yuan in 2023, a year-on-year decrease of 27.10%. Overseas market revenue declined throughout the year, mainly due to inventory removal in the US market. 2) Domestic: In 2023, the company achieved revenue of 350 million yuan, an increase of 26.95% over the previous year. The domestic market revenue grew rapidly, thanks to the smooth expansion of its own brand business, especially core brands such as Juehan and Haoshijia. In the domestic market, the company implements the strategy of “multi-brand matrix, big single product promotion”. Direct sales and distribution are carried out collaboratively, focusing on independent brands and differentiated products, and boosting the continuous growth of revenue in the domestic market.
Profit forecast and rating: We expect the company's net profit for 2024-2026 to be 1.27, 1.75, and 229 million yuan, respectively, with a year-on-year loss of +38.0% and +30.7%. The current closing price corresponds to 2024-2025 PE of 29 or 21 times. As a leading pet food company, the company is rated 34 to 35 times PE in 2024, corresponding to a reasonable value range of 17.06 to 17.56 yuan.
Risk warning: Exchange rate fluctuations, increased market competition, and downstream demand falls short of expectations.