Introduction to this report:
As a leading quick-freezing leader, the company demonstrated operational stability. In 2024, it proposed to create a regional explosion, while upgrading and promoting fresh packaging and continuously introducing new categories to drive growth.
Key points of investment:
Investment advice: Maintain an “Overweight” rating. Maintain the 2024-2026 EPS forecast of 5.90, 6.76, and 7.72 yuan, and maintain the target price of 118.0 yuan.
Build regional exploits and promote territorial transformation. The company has a nationwide production and sales layout, and each region has accumulated a large number of items that sell well within the region, such as sandwich fish cakes. In 2024, the company raised the regional explosion strategy to a strategic level to increase emphasis. In terms of process, the territorial transformation of product development gives local factories greater authority to select products and develop products, and the headquarters supports and guarantees them. It is expected that regional channel products will be harvested rapidly, while products with certain flavor differences and technical barriers will win with quality.
Promote fresh and grilled sausages, and continue to launch new products. The company will continue to upgrade and promote Frozen 5.0 products in 2024, further improving quality through label cleaning and reducing additives, enhancing brand potential, and leading the combined development of high-end and mass products. The company requires current sales volume for new products, and gradually becomes the main product contributing to sales and profits in the medium to long term. Volcanic stone sausage is a rapidly growing and rising category, and the company is firmly cultivating it as the second curve of its main business. Product strategies such as fresh-locking upgrades, new product discovery, and explosive-product serialization help continue to develop categories.
Capital expenditure is prudent, and attention is paid to the profit contributions of non-main businesses. The company's capital expenditure is guided by prudent and reasonable meeting market needs, and future mergers and acquisitions focus on the balance of revenue and profit contributions. In terms of the previously integrated crayfish business, the overall expectations of the crayfish industry in 2023 were high and low, leading to oversupply. The overall start of the industry in 2024 was relatively weak, and participants were more cautious. Instead, the overall inventory of the industry was low and relatively healthy, and it is expected that it will gradually improve in the future.
Risk warning: Demand for downstream catering is recovering slowly, market competition is intensifying, and raw material costs are rising.