The 2023Q1-3 company's revenue/net profit was +10%/+105% year-on-year to 71/82 million yuan. Revenue benefited from strengthened cooperation with old customers, new customer development, and steady growth in channel expansion, and profits benefited from declining raw material costs & significant improvements in cost optimization. The company is actively developing tea and coffee customers. If orders from major customers are placed in the future, the company's performance can be expected to increase.
The 2023Q1-3 company's revenue/net profit was +10%/+105% year-on-year to 7.1 million/82 million yuan.
In 2023Q1-3, the company achieved operating income of 7.1 billion yuan (+10.1% yoy), net profit of 82 million yuan (+104.9% yoy), net profit of 71 million yuan (+118.9% yoy). Among them, 2023Q3, the company's revenue was 260 million yuan (-1.7% yoy), which was mainly dragged down by the decline in trade business, net profit of 35 million yuan (+102.0% yoy), net profit of 31 million yuan (+111.1% yoy), and improved quarterly performance.
Customer development & channel expansion, steady growth in the main business, and the decline in trade business dragged down overall revenue in Q3. 2023Q3, the company continues to promote the development of new customers for downstream catering and food ingredients, while actively entering coffee and other channels. The main concentrated dairy industry maintained positive growth. We estimate that sweetened condensed milk increased by about 10% year-on-year in a single quarter, and the growth rate of evaporated milk reached 30% +, mainly due to low base and customer development. We estimate that Q3's whipped cream business will maintain double-digit growth, and that the cheese business will remain steady, mainly affected by the contraction of retail business strategies. The company's dairy trading business continued to shrink, and the year-on-year decline in Q3 revenue dragged down the company's overall revenue. Excluding the impact of the trade business, we estimate that the revenue growth rate of Q3 companies achieved a year-on-year increase of approximately one unit of measure.
Raw material prices have declined, and rates have been optimized, and the company's profitability has remained at a high level. The price of white sugar has remained at a high level since 2023Q2, but the prices of raw materials such as large packs of flour, fresh milk, and raw cheese were lower, and the company's cost side improved. The gross margin of 2023Q1-3 company was +3.7 Pcts to 23.4% year on year (Q3 +5.1 Pcts to 23.3% year on year). In 2023Q1-3, the company's sales rate was -1.4 Pcts to 4.5% year on year (Q3 year on year -1.1 Pcts to 3.7%), mainly due to the company's contraction of C-side business expenses such as cheese. The management+R&D rate was -0.3 Pct to 6.6% year on year (Q3 year on year -0.7 Pct to 5.4%), while the financial rate was -0.3 Pct to -0.1% year on year (Q3 -0.3 Pct to -0.1% year on year). The final net interest rate of the company was reduced by +5.3 Pcts/+ At 5.0 Pcts to 11.5%/10.1% (Q3 YoY +6.8 Pcts/+6.3 Pcts to 13.2%/11.8%), profitability remained at a high level. As the company continues to promote cooperation with old customers and actively expand new customers such as tea, coffee, and bakery, etc., while the product matrix of condensed milk, cream, and coconut products continues to be enriched, compounded by the low price of packaging powder, we expect Q4's performance to maintain a relatively rapid growth rate.
Risk factors: food safety issues; increased market competition; the company's new products & new market development falls short of expectations; risk of large fluctuations in raw material prices.
Investment suggestion: Considering the company's good profit performance in 2023Q3, raise the company's 2023/2024/2025 EPS forecast to 0.87/1.01/1.15 (the original forecast was 0.71/0.90/1.07 yuan). Referring to comparable companies' 2024 PE levels (Hairong Technology 21x, Miacolanduo 40x, based on Wind's unanimous expectations), considering the company's good growth in the next few years and its dominant position in the condensed milk industry, the company was given 25 times PE in 2024, with a corresponding target price of 26 yuan, maintaining the “increased holding” rating.