Announcing the 2023 Annual Report and the 2024 First Quarter Report, we achieved revenue of 3.149 billion yuan in 2023, an increase of 17.02% year on year; net profit to mother of 0.457 billion yuan, an increase of 33.65% year on year. The first quarter of 2024 achieved revenue of 0.853 billion yuan, an increase of 11.34% year on year, and realized net profit of 0.176 billion yuan to mother, an increase of 37.20% year on year.
Food extract release contributed to a high increase in online channels, and overall revenue growth was steady. In the first quarter of 2024, the company's offline/online channel revenue was 0.72/0.13 billion yuan, up 2.9%/101.2% year on year; revenue from hot pot condiments/Chinese food condiments/sausage and bacon seasoning was 0.29/0.49/0.03 billion yuan respectively, up 1.2%/17.8%/21.8% year on year. The high increase in online channel and Chinese food seasoning revenue was mainly due to food extraction; however, offline channels and hot pot seasoning growth was weak because consumption power had not recovered. The net number of the company's dealers increased by 18 to 3,183 in the first quarter of 2024, and the company plans to continue developing offline dealers with exclusive catering attributes in '24.
Profitability improved significantly. Gross margin increased 3.4 pct year-on-year to 44.1% in the first quarter of 2024, mainly due to business structure optimization and declining raw material prices. In the first quarter of 2024, the company's sales/management expenses ratio was 17.0%/5.1%, compared with +2.2/-0.8pct. The increase in sales expenses was mainly due to increased market entry.
Taken together, the net interest rate to the mother reached 20.6%, an increase of 3.9 pct over the previous year, due to an increase in the share of highly profitable foodstuffs and an increase in investment income.
Employee stock ownership plans enhance motivation and help medium- to long-term development. The company's newly launched employee stock ownership plan is based on 2023 revenue, and the target growth rate for 2024/2025 is not less than 10%/26.5%. The company's 2024 revenue sales target is 15%, which is slightly higher than the equity incentive target, mainly because the company wants more employees to enjoy the company's development dividends. Looking ahead to 2024, the company plans to actively develop regional specialty products on the basis of cultivating large national products; the channel-side company has integrated the organizational structure and plans to use food extract brands to accelerate online business development, integrate and collaborate on the small b side, and feed back offline distribution channels with online data.
Risk warning: Prices of raw materials have risen sharply, industry competition has intensified, new product promotion results have fallen short of expectations, etc.
Investment advice: Considering the moderate recovery of downstream restaurants, we slightly lowered our previous profit forecast. The company achieved total operating income of 3.63/4.15/4.75 billion yuan in 2024-2026 (previously the 2024-2025 revenue forecast was 3.73/4.37 billion yuan), 15.2%/14.5%/14.3% YoY; in 2024-2025, the company achieved net profit of 0.55/0.66/0.69 billion yuan (previously 2024-2025) Profit forecast is 0.55/0.66 billion yuan), 20.7%/3.9% year-on-year; the company is expected to achieve EPS of about 0.52/0.62/0.64 yuan in 2024-2026, and the current stock price corresponding to PE is 26.5/22.1/21.3 times, respectively. There is plenty of room for medium- to long-term retouching. The company's product advantages are obvious, and its share is expected to increase, maintaining the “superior to the market” rating.