Core views
The company Q2 continued the good development trend of Q1 and maintained rapid growth, mainly due to the company's strong product strength and continuous expansion of new products+customers. The company's catering channel (accounting for 49.81%) performed the most, with a year-on-year increase of 37.94%. Brand customization (accounting for 11.23%) also developed steadily based on customer business development, with a year-on-year increase of 14.77%. At the same time as business expansion, the company is also controlling expenses. The C-side investment was relatively cautious, and the net interest rate reached 16.54%, an increase of 0.66 pcts over the previous year. The company is currently small in size, and customer acquisition+new orders have an obvious effect on the overall promotion of the company. In the current economic environment, it is expected to show the ability to grow faster.
occurrences
The company released its 2024 semi-annual report:
Within H1, the company achieved revenue of 0.187 billion yuan, up 15.16% year on year; net profit to mother was 0.029 billion yuan, up 20.68% year on year; net profit after deducting non-return to mother was 0.027 billion yuan, up 24.70% year on year.
In Q2, the company achieved revenue of 0.096 billion yuan, an increase of 15.58% year on year; net profit to mother was 0.016 billion yuan, up 20.37% year on year; net profit after deducting non-return to mother was 0.015 billion yuan, up 24.82% year on year.
Brief review
Catering channel expansion is speeding up, and brand customization is growing steadily
The company Q2 continued the good development trend of Q1 and maintained rapid growth, mainly due to the company's strong product strength and continuous expansion of new products+customers. By product, Q2's sauce seasonings (accounting for 78.53%) increased 25.39% year-on-year, while powder seasonings (accounting for 20.64%) and food additives (accounting for 0.44%) decreased by 9.73% and 53.80% respectively, mainly due to downstream customer category adjustments. By channel, Q2's catering channel (accounting for 49.81%) had the best performance, with a year-on-year increase of 37.94%. Brand customization (accounting for 11.23%) also developed steadily, with a year-on-year increase of 14.77%. The e-commerce channel (accounting for 0.67%) was small in size but performed well at the initial stage, increasing 23.26% year on year. Other channels were adjusted. Food processing (accounting for 35.64%), direct sales supermarket (accounting for 0.40%), and dealer channels (accounting for 1.84%) decreased by 2.47% and 14.21%, respectively %, 40.04% Regionally, East China (accounting for 71.43%) had the largest business volume, with a year-on-year increase of 19.37%. Among other regions, Northeast China (4.59%), Central China (4.88%), and South China (4.10%) also achieved growth, increasing 9.99%, 3.74%, and 60.03% year-on-year respectively, while North China (accounting for 14.05%) decreased 3.1% year on year.
Gross margin decreased year-on-year, and fee control boosted profitability
In the Q2 single quarter, the company's gross margin was 38.05%, down 2.49pcts year-on-year, mainly due to changes in product structure. In Q2, the year-on-year changes in the company's sales/management/R&D/finance rates were -1.21/-1.52/-0.44/+0.12pcts, respectively. Among them, the decrease in sales rates was mainly due to a year-on-year decrease in expenses such as equity incentives. In 24Q2, the company's net interest rate reached 16.54%, up 0.66pcts year-on-year.
The company's product strength is prominent, benefiting from the increase in the restaurant chain rate
The catering industry grew relatively slowly in the first half of this year, but the company achieved more growth than the industry. The main reason is that most of the company's customers are restaurant chains and provide customized services. Faced with adjustments in the catering industry, the restaurant chain is more able to cope with risks, and the restaurant chain rate continues to increase, which is beneficial to the company's business development. At the same time, the company relies on years of accumulated product development and customer service experience, and its products have been recognized by customers. Currently, it has entered the Yum Sheng supply chain system on the restaurant side, and the food processing channel has also developed new casual snack customers, and it is expected that it will continue to contribute more in the future. The company is currently small in size, and customer acquisition+new orders have an obvious effect on the overall promotion of the company. In the current economic environment, it is expected to show the ability to grow faster.
Profit forecast:
We expect the company to achieve revenue of 0.429, 0.503, and 0.585 billion yuan in 2024-2026, and net profit to mother of 0.07, 0.084, 0.097 billion yuan, and corresponding EPS of 0.71, 0.85, and 0.99 yuan/share.
Risk warning:
1) Downstream demand recovery falls short of expectations: The company's downstream mainly serves catering and food processing industries. If subsequent customer business recovery falls short of expectations, it will have an impact on the company's revenue side performance. 2) Risk of worsening market competition pattern: The competitive pattern of the industry is scattered and there are many participants. The current size of the company is still small and the sales area is concentrated. If more market players enter the industry in the future, it will increase the competitive pressure faced by the company, and there is a risk that the market will be lost and that it will be more difficult to develop customers. 3) Food safety risk: The company is mainly engaged in condiment business. If a related food safety incident occurs, it will have a significant adverse impact on the company's business development.