Introduction to this report:
Revenue fluctuations are mainly due to channel adjustments, and cost dividends combined with rate optimization continue to release profits. Each share is proposed to pay a dividend rate of 1.2 yuan (tax included) of about 73%. At the same time, it is proposed to repurchase 1-2 billion yuan for cancellation. The repurchase is treated as if the dividend rate exceeds 4.6% after the dividend.
Key points of investment:
Maintain an increase in holdings rating. Considering the impact of channel adjustments and one-time revenue, the 24-year EPS was raised to 2.04 yuan (1.92 yuan), the 25-year EPS was reduced to 1.94 yuan (2.23 yuan), and the 26-year EPS was given 2.16 yuan. Referring to comparable company valuations, the 24-year 17X PE was given, and the target price was maintained at 35 yuan.
In 2023, volume growth was the main focus, and falling costs unleashed profits. In 2023, we achieved total revenue of 126.18 billion yuan, +2.44% YoY, net non-net profit of 10.03 billion yuan, +16.78% YoY; 23Q4 total revenue -1.82%, net non-net profit +56.49%. Revenue from liquid milk/milk powder and dairy/cold drinks/other products increased by 0.7%/5.1%/11.7%/60.7% respectively in 23, mainly driven by volume. The annual gross profit margin of 32.80% and +0.29pct mainly benefited from the decline in milk prices. Increased cost efficiency drove sales and management rates of -0.71 pct and -0.25 pct, respectively, after deducting 7.95% non-net interest rate and +0.98 pct year over year.
24Q1 revenue was lower than expected mainly due to channel adjustments. 24Q1's total revenue was 32.58 billion yuan, -2.58% year over year, after deducting non-net profit of 3.73 billion yuan, and revenue was lower than expected due mainly to a 6.8% decline in liquid milk revenue. After the Spring Festival, the company actively made channel adjustments based on market performance to control the pace of shipment digestion channel inventory, which was greatly affected; profit was in line with expectations, with a net profit margin of nearly 2.2 billion yuan due to the transfer of 95% of shares in the mining company Changji Shengxin by a wholly-owned subsidiary in January 24. Earnings.
The 24-year plan is to achieve total revenue of 130 billion yuan and total profit of 14.7 billion yuan. On the revenue side, sorting through the liquid milk channel is showing initial results, and it is expected that the growth rate will gradually recover; the pressure on the infant formula industry has eased, and the adult powder business continues to grow; cold drinks continue to benefit from being concentrated; and the B-side of cheese drives growth. On the profit side, product structure optimization and efficiency improvements will further enhance profitability.
Risk warning: Industry sentiment fluctuates and competition intensifies.