The basic oat market is growing rapidly, and new businesses and new channels continue to be developed. Maintaining the “increase in holdings” rating, Seagra Foods revenue in 2023 was 1.58 billion yuan, +18.9% year over year, and net profit to mother was 120 million yuan, +6.1% year over year.
2024Q1's revenue was 570 million yuan, +46.1% YoY, and net profit to mother was 50 million yuan, +14.6% YoY. The company's revenue was better than expected, but considering that expenses were high during diversified business development, we slightly lowered our 2024-2025 profit forecast and added the 2026 profit forecast. The estimated net profit for 2024-2026 was 1.4 (-0.1) million yuan, 1.6 (-0.1) million yuan, and 200 million yuan, respectively, +19.1%, and +20.1% year-on-year respectively. EPS was 0.62 (-0.03) yuan, 0.74 (-0.04) yuan, and 0.88 yuan, respectively. The current stock price corresponds to PE, respectively At 21.9, 18.4, and 15.3 times, the company accelerated the growth of the basic oat food market through product innovation and upgrading, while actively developing new products and channels to create a new growth curve and maintain a “gain” rating.
The main oat food industry is improving the quality and growth rate. Big Health's new business is expected to contribute +4.0%/+33.8%/+22.0% year-on-year respectively in 2023. The company insisted on product innovation and upgrading, pure oats maintained steady growth, compound oats continued the high growth trend, cold oats steadily rebounded, and oat food as a whole achieved an improved growth rate. The main business of 2024Q1 oats continues to increase, and new protein powder products have achieved good sales. The main reason is that the company has made many innovations in gift box products, while new channels continue to contribute to the increase.
In 2024, the company will horizontally expand diversified oat foods in the main oat business to ensure steady growth in the basic market; and develop a new health business to create a new driving force for growth through innovative development of functional nutritious foods.
Pay attention to the development of direct channels and actively embrace new online and offline channels In 2023, the company attached importance to direct channel development, and actively embraced snack sales channels. The year-on-year growth rate of snack channels was over 180% in 2023; online companies have perfected e-commerce channels, traditional e-commerce platforms are growing steadily, and emerging e-commerce such as Douyin is growing at a high rate. In Q1 2024, the company's new online and offline channels will continue the high growth trend. In the future, the company will accelerate the development of diversified new channels on the basis of deepening traditional channels. Online e-commerce platform companies will pay more attention to improving cost investment efficiency and improving online profitability; increasing offline cooperation with leading snack companies will lay out more oat food SKUs, and the new channels are expected to continue to contribute more.
The gross margin increased due to the improvement of the product structure, and the net profit margin was pressured by the gross margin of +1.44pct to 44.55% in 2023, and the gross margin of 2024Q1 was +1.28pct to 43.71% year over year, mainly due to the company continuing to improve the product structure; the sales expense ratio in 2023 and 2024Q1 was +1.78pct and +4.07pct, respectively. The main reason was that the company increased its market expenses, and other expense ratios were relatively stable; the net interest rate in 2023 was 0.88pct to 7.32% year on year, 2024Q1 net margin -2.18pct YoY to 7.96%. Profitability is expected to increase in the future as the company's product structure is upgraded, the diversified layout of raw material production areas, and the efficiency of cost investment is improved.
Risk warning: macroeconomic downside risk, increased risk of market competition, risk of rising costs.