Traditional channels are adding outlets and expanding channels are progressing steadily, and snack franchise channels are increasing month by month.
1) Traditional channels: Based on the company's goal of achieving 1 million outlets by the end of 2024, the company requires proactive investment in the maintenance and development of terminal outlets. Therefore, we expect that the pace of adding more outlets and expanding channels in the first half of the year will continue to advance rapidly, leaving more room for adjustments in the second half of the year. Along with the advancement of additional outlets and channel expansion, coconut juice, as the most core growth variety, is expected to continue its good growth trend, and canned products that get rid of the impact of the high base in the first quarter are also expected to grow steadily.
2) Snack franchise: The company actively embraces emerging channels such as snack franchise chains. Currently, its products are mainly two major products - canned yellow peaches and canned oranges. Currently, the products have entered some top snack franchise chain channels, and will also promote beverage products into the channel one after another. According to grassroots research, in addition to canned yellow peaches/oranges in glass jars, the company is busy with snacks and has added canned yellow peaches/oranges in plastic cups. The SKU has further increased, showing that the company's products are selling well and the cooperation between the two sides is gradually deepening. We believe that in the context of the gradual expansion of snack franchise cooperation channels+increase in product SKUs, the company's snack franchise channel can be expected to perform in 2024.
Online sales of Coconut Shark Coconut Water on Douyin have increased dramatically. Offline co-branding is in full swing, and the results of multi-channel collaboration are beginning to show.
1) Online channel: According to the company's Coconut Shark New Product Report, between 21:00-22:00 on May 24, Coconut Shark sold more than 10,000 boxes of coconut water on the Douyin platform, and daily sales increased 1672% month-on-month on May 24. The company's online channel invited celebrities and talents/KOLs to share, and Coconut Shark's online performance showed a trend in volume. According to Douyin Cicama platform data, Coconut Shark Coconut Water was shared by 1,197 persons/KOLs, and 3171 live broadcasts were broadcast, creating 1,239 pieces of content, and the number of viewers exceeded 10 million.
2) Offline channels: Coconut Shark Coconut Water is a joint name with Xiaolongkan. The company chose to launch a joint first stop in the southwest region where its brand is known to open offline linkage at the Chengdu Xiaolongkan Hot Pot Chunxi Taikuri Store to enter the dining channel. We expect the company to seek more experiments offline to amplify the brand's volume.
We believe that after initial testing at the end of 23 years, the operating capacity has continued to increase in 24 years, and the influence of the Coconut Shark Coconut Water brand continues to expand, and online Douyin is showing initial results. It is expected that the summer ready-to-drink product opportunities will be seized and gradually expanded.
Profit forecast: We expect the company to achieve operating income of 22.24/25.47/2,877 billion yuan in 2024-2026, up 16%/15%/13% year on year, achieve net profit of 3.30/3.89/456 million yuan, up 18%/17% year on year, EPS of 0.74/0.87/1.02 yuan/share, corresponding PE is 19X/16X/14X, maintaining the “recommended” rating.
Risk warning: Food safety issues, risk of raw material price fluctuations, new product expansion falls short of expectations, channel development falls short of expectations, and production capacity investment falls short of expectations.