Brief performance review
On April 29, 2025, the company disclosed its 24-year annual report and 25-year quarterly report. 1) Achieved revenue of 5.22 billion yuan in 24 years, +5.3% year-on-year; realized net profit of 1.34 billion yuan to mother, +5.7% year-on-year. 2) 25Q1 achieved revenue of 0.96 billion yuan, +2.7% YoY: Net profit to mother of 0.19 billion yuan, +2.1% YoY. The results are in line with market expectations.
Management analysis
By product: 1) In '24, the high-end and mid-range achieved revenue of 4.76/0.26 billion yuan, +2%/+29%, with sales volume +3%/+36%, tonnage price -1%/-5%, and gross margin +0.8pct/-2.4pct year-on-year. 2) 25Q1 high-end and mid-range achieved revenue of 0.85/0.05 billion yuan respectively, +7%/-34% year-on-year. The company is currently reorganizing its product strategy. The goal is to establish a dual brand system of Shuijingfang + First Fang, implement the Gemini Strategy within the Shuijingfang brand, and create the second largest single product in line with No. 8.
By channel: 1) In '24, the new channels/wholesale agents achieved revenue of 0.53/4.5 billion yuan, +10%/+2%, respectively, with sales volume +23%/+4%, tonnage price -11%/-2%, and gross margin of -1.1 pct/+0.7 pct year-on-year. 2) The 25Q1 new channel/wholesale agent achieved revenue of 0.29/0.61 billion yuan respectively, +184%/-20% over the same period last year. According to reports, the new channel increased dramatically and its share increased to 32%. The company officially launched the 020 new retail business at the end of 24, forming cooperation with platforms such as Meituan Flash Sale, JD Second Delivery, and Crooked Horse Wine Delivery, while increasing the emphasis on group buying business and increasing resource preference. The core goals for 25 years also included “the development of group buying capacity, with group buying businesses in some cities accounting for more than double digits in their total sales.”
Judging from the report structure: 1) Net profit margin +0.1pct to 25.7% year on year in 24, of which gross margin was -0.4 pct year over year, and sales expenses ratio was -1.3 pct year over year. 2) Net profit margin of 25q1 was -0.1pct to 19.8% year-on-year, including gross margin +1.5pct, sales expenses ratio -7.6pct, and sales tax and additional share +3.5pct. 3) The balance of contract liabilities at the end of 25Q1 was 0.94 billion yuan, -0.21 billion yuan. After considering revenue + month-on-month contract liabilities, the year-on-year ratio was +9.4%; 25Q1 sales revenue was 0.73 billion yuan, -21% year over year, and accounts receivable increased to 0.39 billion yuan month-on-month. The company has made many changes at the level of products, national expansion, internal organization & incentive system sorting, etc., and it is recommended to continue to pay attention to the results of its reforms.
Profit forecasting, valuation and ratings
Considering the recovery in sub-high-end demand, we lowered the 25/26 net profit by 5%/8%, and the estimated revenue growth rate for 25-27 is 4.0%/6.2%/11.2%: the net profit growth rate to the mother is 4.8%/7.2%/12.7%, and the corresponding net profit to mother is 1.41/1.51/1.7 billion yuan; EPS is 2.88/3.09/3.48 yuan, and the PE valuation corresponding to the current price of the company's stock is 15.8/14.7/13.0 times, maintaining the “increase” rating.
Risk Alerts
Macroeconomic recovery falls short of expectations: Industry policy risks: Subhigh-end demand recovery falls short of expectations: Food safety risks.
