Incident: The company released its 2024 quarterly report. During the reporting period, the company achieved revenue of 853 million yuan, +11.34% year over year; net profit to mother was 176 million yuan, +37.2% year over year; net profit after deducting non-return to mother was 147 million yuan, +23.47% year over year. The company's revenue grew steadily, and profits surpassed expectations.
The high increase in winter cuisine has led to large-scale expansion, and online channels have performed well. In terms of products, 2024Q1's hot pot condiments/Chinese cuisine condiments/sausage and bacon condiments/other revenue were +1.18%/+17.75%/+21.79%/+11.51%, respectively. The relatively rapid growth of Chinese food seasoning is estimated to be mainly due to food ingredients and leading to scale increases, while winter seasoning continued to show rapid growth performance. Looking at channels, the company's offline/online channel revenue was +2.94%/+101.23% year-on-year. The high increase in online channels is estimated to be mainly due to incremental food extraction business, which is mainly online sales. From a regional perspective, the company's revenue in the East/South/South/West/North/Central regions was +6.88%/+11.15%/+23.35%/+8.20%/+1.56%, respectively. The Southwest port market achieved good performance. In addition, the number of dealers in each region added -1/7/24/-18/6 compared to the end of 23, respectively.
Gross profit has improved dramatically, and profit elasticity has been released beyond expectations. The 24Q1 company achieved a gross profit margin of 44.05%, +3.44/3.75pcts year over year, respectively. It is estimated that the main raw materials such as oil continue to decline and that the optimization of the company's product structure has led to gross profit elasticity. On the cost side, the 24Q1 company's sales expense ratio was 17.02%, +2.18/-1.44pcts year over year; management expense ratio was 5.07%, -0.83/-0.48pct year over month; R&D expense ratio 1.05%, -0.06/+0.50pct year over month, respectively; financial expense ratio -0.27%, +0.07/-0.01 pct year over month, respectively. The increase in the sales expense ratio is mainly due to the company's increased investment in new e-commerce and other channels, while management and R&D expense ratios have benefited from a steady decline in scale effects. Furthermore, the company's 24Q1 investment income reached 34.3786 million yuan, driving an increase in overall profitability. Taken together, in 24Q1, the company achieved a net interest rate of 20.63%, +3.89/+5.73 pcts year over year, respectively; net interest rate of 17.22% without return to mother, +1.69/ +3.78 pcts year over year, respectively, and a significant increase in profitability.
The 24-year results are off to a good start, and we look forward to the next peak season combined with new product performance. Over the past 22 years, the company has shown a steady and rational development trend. The product side has actively upgraded and promoted innovation, the channel side has continuously optimized and reformed, and endogenous extension has continued to grow. Looking ahead to 24 years, the company's core new products “not spicy soup” and “thick hot pot” will gradually increase the company's growth momentum. The peak season for large seasonal items such as crayfish and winter stew is expected to continue to grow rapidly. Thanks to model advantages, food extracts will continue to grow rapidly through online Little B channels. In the phase of steady revenue expansion, the company is expected to continue to unleash performance elasticity through cost and product structure improvements and scale effects.
Profit forecast and investment advice: Considering that net profit to mother for 24Q1 exceeded expectations, we raised net profit to mother for 24-26 years to 5.76/7.00/826 million yuan (5.65/6.93/823 million yuan in the previous 24-26 year period), +26%/+22%/+18%, corresponding EPS of 0.54/0.66/0.78 yuan, maintaining the target price to 16.21 yuan to maintain the “buy” rating.
Risk warning: Food quality and safety, growth of large products falling short of expectations, price fluctuations of major raw materials, etc.