Financial News Agency, December 11 (Reporter Chen Kang) Yiming Foods (605179.SH) experienced three consecutive ups and downs in the middle of last week. However, compared to the “astonishing impact” of the stock price, the company's performance was “as calm as water.” At the performance briefing held today, senior management of the company stated that next year's store opening plans will not go beyond East China, and that improvements in the cost ratio of offline stores and the company's net interest rate will await business development.

At the performance meeting, some investors expressed questions about the company's net interest rate being too low (the net interest rate from January to September 2023 was 1.82%). The company responded, “Yiming Foods is a leading agricultural enterprise with a 'three industries, two in a row' development model. Our operating costs are mainly composed of raw material costs, labor, and equipment depreciation. In the future, as the company's business expands, the marginal contribution of products increases, and net interest rates will increase accordingly.”

Yiming's first production base outside Zhejiang Province (third in the country), Jiangsu Yiming Food Production Base, has not been profitable since it was officially put into operation at the end of May 2021. The company said at the performance meeting that it is expected to be achieved by 2024.

Yiming Foods is based in Wenzhou, Zhejiang, and is engaged in the fresh dairy and baked goods business. Regarding the store opening situation, the company stated at the performance meeting, “The main expansion areas in 2024 are the five major urban areas of Zhejiang, Fujian, Jiangxi, Jiangsu, and Anhui. Please focus on the actual disclosure data for each period of implementation.”

According to the company's statement at the performance conference, Yiming Foods has no intention of leaving East China. Zhu Like, chairman of the company, said, “There are no plans to open stores outside of East China in 2024.” At the same time, he mentioned, “There is no change in our goal of opening 6,600 stores in East China in the future.” In the 2024 annual strategic budget of Yiming Foods, it is planned to add 27 new urban areas in East China.

Product sales of Yiming Foods use the “Yiming Real Milk Bar” chain as the main channel. Among them, the company's milk bar stores adopt a business model mainly based on franchising and supplementary direct management. In the first three quarters of this year, the company operated 2,050 offline stores in East China, including 1,432 franchise stores and 618 direct-run stores.

The company has already determined a strategy of “franchise first, direct management as a supplement”. Judging from the data, 289 new franchise stores were opened, 131 new stores were closed, 23 new direct-run stores were opened, and 60 were closed in the first three quarters of this year, validating this trend. At the same time, the performance of direct-run stores was slightly poor, with sales in the first three quarters falling 7.79% year over year.

It is worth noting that although the increase in the number of franchise stores and the revenue of a single store has led to an increase in sales this year, the gross margin of franchise stores is 34.05 percentage points lower than that of directly-managed stores.

By the end of September 2023, Yiming had achieved a total operating income of 1.95 billion yuan, an increase of 8.15% over the same period last year, and net profit of 35.44 million yuan, turning a loss into a profit over the previous year.