Incident: 1) The company released its 2023 annual report and its quarterly report for 2014. The company achieved revenue of 3,550 million yuan/yoy -1.46% in 23 years, net profit of 333 million yuan/yoy +49.46%; single Q4 achieved revenue of 734 million/yoy -14.65%, and net profit of 9.917,400 yuan (loss of 5.764 million yuan for the same period last year). 2) 24Q1 achieved revenue of 695 million yuan/yoy -8.0%, net profit to mother of 54 million yuan/yoy +20.87%.
Revenue is still under pressure, with a net increase of 510 companies for the full year 23. 1) By product, the company's revenue for fresh goods products in 23 years was 3.04 billion yuan/yoy -1.71%, including husband and wife lung revenue of 1,099 million yuan/yoy +0.46%, whole poultry revenue of 889 million yuan/yoy -4.06%, spicy and casual revenue of 314 million yuan/yoy -18.68%, and other fresh goods revenue of 711 million yuan/yoy +7.90%; 2) Looking at regions, the company's revenue in East China in 23 was 3.92 billion yuan/yoy -5.43%. 100 million yuan/yoy +0.93%, revenue in Southwest China 317 million yuan/yoy +9.46%, North China revenue of 156 million yuan/yoy +8.04%, revenue in South China 87 million yuan/yoy +8.18%, revenue in northwest China 51 million yuan/yoy +28.89%, revenue in Northeast China 3.1 million yuan/yoy +41.54%; 3) Looking at the sub-model, the company's 23 distribution model revenue was 3.051 billion yuan/yoy -2.68%, direct operating model revenue 0.63 billion yuan/yoy YOY +40.90%; 4) Looking at store openings, the total number of stores nationwide was 6205 at the end of '23, a net increase of 510 compared to the end of '22; 5) The company's 24Q1 revenue YOY -8.0%, and operations are still under pressure.
The year-on-year improvement in gross margin led to an increase in profitability. 1) The company's 23-year gross profit margin was 22.46% /year over year +6.49pct, of which the gross margin for husband and wife lungs/whole poultry/spicy leisure products/other fresh goods was +18.75/ -1.35/-0.9/+5.41pct year on year. The year-on-year increase in gross margin was mainly due to the decline in the prices of imported beef and other raw materials; 2) The company's 23-year sales/management/financial/R&D expense ratio was +2.32/+0.19/ -0.01/-0.00pct (total +2.50pct). The year-on-year increase in sales expenses was mainly due to the company's development of new sub-brands , expand new regions, increase investment in advertising expenses and increase corresponding sales staff; 3) The company's 23-year net profit margin was 9.34%/+3.18pct; 4) The company's 24Q1 net profit margin was 7.77%/+1.86pct year over year, of which gross margin was +2.20pct year over year, and the sales/management/finance/R&D expenses ratio was +0.68/-0.09/+0.10/+0.20pct (total +0.89pct).
The company has been deeply involved in the main business for 23 years, and has continued to improve the efficiency of single store operations, strengthen product development and brand marketing, and continue to promote the digital and intelligent upgrading of production bases on the supply chain side. Feng Siyu Steak Beef, which was acquired by the company in '22, has successfully crossed the threshold of 100 stores and doubled its revenue and profits; continued to invest in brands such as Laohan Fried Chicken and Beijing Crispy for 23 years; and established an overseas division in May '23 to expand overseas markets. The company distributed a cash dividend of 0.8 yuan per share in '23. The dividend payment rate reached 99%, and the dividend performance was outstanding.
Demand recovery was slightly lower than expected. We mainly lowered the company's revenue forecast, adjusted the company's 2024-26 EPS forecast to 0.96/1.09/1.22 (1.07/1.25 yuan in 24/25 before adjustment), and used a comparable company valuation method to give the company a 24-year PE valuation of 23 times, corresponding to a target price of 22.08 yuan, maintaining the “shareholding rating”.
Risk warning
Demand recovery falls short of expectations, industry competition intensifies, cost fluctuations, etc.