Incident Overview

The company 24H1 achieved revenue of 0.892 billion yuan, 4.87% year-on-year, net profit to mother of 0.059 billion yuan, 6.14% year-on-year, after deducting non-attributable net profit of 0.059 billion yuan, or 11.29% year-on-year.

The company achieved revenue of 0.429 billion yuan in 24Q2, 1.65% year-on-year, net profit of 0.025 billion yuan, -3.36% year-on-year, after deducting non-attributable net profit of 0.025 billion yuan, or 7.77% year-on-year.

Analytical judgment:

Operations were under pressure in the first half of the year, and cuisine products performed well

By product, the company achieved revenue of 3.74/0.17/0.211/0.133 billion yuan respectively, compared to -4.26%/-8.34%/+32.40%/+18.99%, respectively. Among them, the decline in deep-frying products was mainly due to a slowdown in the growth rate of core customers, and sales of core single products were constrained by increased market competition; the decline in the baking category was mainly due to the reduction in the share of main baking products in the core customers; the increase in cooking products mainly benefited from the rapid increase in the group meal market, which benefited from the rapid increase in the group meal market As a result of development, the penetration rate of products in group meal channels has increased; the increase in the food category is mainly due to the increase in the contribution of B-side prepared dishes.

By channel, the company's direct operation/distribution achieved revenue of 0.412/0.476 billion yuan respectively, +8.54%/+1.77%, respectively. The slowdown in direct management growth was due, on the one hand, to the high base of direct management channels in the same period last year, and on the other hand, sales of the company's core customers declined year-on-year; the distribution channel was affected by the external environment and growth slowed.

Looking at the subregion, the revenue of Changjiang North and Yangtze River South was 0.251/0.62 billion yuan respectively, 2.95%/5.20% year-on-year, with 734/689 dealers respectively, and growth was relatively steady.

Revenue slowed to 1.65% in 24Q2, which we think was mainly affected by the weak consumer environment.

Increased gross margin+increased expense ratio, steady profitability

On the cost side, the company's gross margin increased 2.0pct to 25.2% year-on-year in the first half of the year, mainly due to a sharp drop in the prices of the company's raw materials such as flour and soybean oil. On the cost side, the company's sales/management/R&D/finance expenses rates were 5.5%/9.4%/1.2%/-0.2%, respectively, compared with the same period last year, +0.7/+1.1/+0.2/-0.4, respectively. The increase in sales expenses ratio was mainly due to an increase in sales staff remuneration and promotion expenses. Taken together, cost optimization combined with cost increases in the first half of the year. Net interest rate increased slightly by 0.1 pct to 6.6% year on year, and corresponding net profit to mother increased 6.1% to 0.059 billion yuan year on year.

The Q2 cost-side dividend continued, with a year-on-year increase of 2.4 pct to 25.0%, but the cost-side sales and management expenses ratio increased by 0.5/1.7 pct, respectively. Combined, the company's net interest rate decreased 0.3 pct to 5.8% year on year, and the corresponding net profit to mother decreased by 3.4% to 0.025 billion yuan year on year.

Pressured by demand in the short term, actively adjust to respond to changes

The company is deeply involved in the catering supply chain. Although the first half of the year was affected by demand, the company actively adjusted and is expected to return to steady growth. The company is a rare high-quality player in the catering supply chain. In particular, it already has a first-mover advantage in the field of frozen rice and noodle products. I am optimistic that the company will continue to explore catering supply chain needs, explore more market opportunities, and continuously expand its performance and market competitiveness.

Investment advice

Referring to the latest financial report, we lowered the company's 24-26 forecast of 2.205/2.602/3.044 billion yuan to 2.058/2.367/2.674 billion yuan; lowered the company's 24-26 EPS forecast of 1.65/2.03/2.45 yuan to 1.50/1.85/2.15 yuan. Corresponding to the closing price of 23.33 yuan/share on August 28, 2024, PE was 16/13/11 times, respectively, maintaining the company's “buy” rating.

Risk warning

Increased industry competition, rising raw material prices, food safety