Incidents:
The company achieved revenue of 5.341 billion yuan in 2022, an increase of 4.41% over the same period; net profit of Fumo was 592 million yuan, a decrease of 179.82%; after deducting net profit of 556 million yuan, a decrease of 22.50% over the same period. The fourth quarter of 2022 achieved revenue of 1,385 million yuan, a decrease of 18.71%; net profit after deducting non-return to the mother was 153 million yuan, a decrease of 57.95%.
Revenue from all categories of condiments increased in single digits. In the fourth quarter alone, soy sauce revenue declined in 22 years. Soy sauce, chicken powder, cooking oil, and other condiments achieved revenue of 30.25, 5.96, 4.99, and 768 million yuan respectively, up 7.01%, 9.20%, 1.86%, and 9.31% respectively. Divided by volume and price, in '22, the amount of soy sauce was +5.16%, the amount of chicken powder was +5.44%, the price +3.55%, the amount of cooking oil was -8.25%, the price was 11.04%, the amount of other condiments was +4.21%, and the price +4.90%. Among them, soy sauce, chicken extract, chicken powder, cooking oil, and other condiments achieved revenue of 8.13, 1.60, 1.32, and 195 million yuan respectively in the fourth quarter of '22, which was -4.09%, +3.07%, +2.53%, and +1.83%, respectively.
Regions with developed catering, such as the east, have been greatly affected by the epidemic. The share of revenue in the north and the central and western regions increased slightly in '22. Apart from the decline in revenue in the east, which was disrupted by the decline in catering channels, revenue in other regions maintained relatively rapid growth, and the number of dealers also increased at the same time. Specifically, in '22, revenue from the eastern, southern, midwestern, and northern regions increased by 0.68%, 7.03%, 11.27%, and 12.61% respectively, accounting for 23.25%, 41.93%, 20.67%, and 14.56%, respectively. Among them, revenue for the fourth quarter alone was -16.19%, -2.48%, +9.34%, and +15.83%, respectively. In '22, the number of distributors in the East, South, Midwest, and North reached 397, 318, 539, and 749 respectively, up 16.08%, 29.27%, 22.78%, and 10.96% respectively.
Costs have risen, expenses have increased, and the net interest rate of the condiment business has declined somewhat. In '22, the gross profit margin of the company's condiment business was 30.73%, a decrease of 2.72 pct. The main thing is that the rise in raw material prices affected the increase in operating costs. The company's sales expenses ratio and management expenses ratio were 8.85% and 9.40% respectively, with the same increase of 0.79 pct and 1.10 pct respectively. The increase in the sales expense ratio was mainly affected by the increase in sales staff remuneration expenses and the increase in operating expenses. The increase in the management expense ratio was mainly due to the increase in job stabilization allowances issued and performance bonuses calculated in '22 (the assessment target was not completed last year, no related expenses were charged), and the year-on-year increase in managers' remuneration expenses. In '22, Delicious Fresh Company's net profit margin was 11.73%, down 2.28 pct from the previous year. Among them, the net profit margin for the fourth quarter alone was 12.52%, down 6.06 pct from the previous year, but increased 4.33 pct from the previous month.
Profit Forecasts, Valuations, and Ratings
The sharp loss in the company's performance in '22 was mainly based on the accrued debt of 1,178 billion yuan based on the first-instance litigation judgment of the land dispute. With the recovery of the condiment industry boom this year, the easing of combined cost pressure and improved governance at the shareholder level, the company's performance growth rate is expected to return to double digits. We expect the annual revenue of 23-24 companies to be 5.927 billion yuan and 6.682 billion yuan respectively, up 10.97% and 12.75% respectively. Among them, the condiment business revenue was 5,532 billion yuan and 6.254 billion yuan respectively, up 13.18% and 13.05% respectively. The net profit of Guimu was 876 million and 1,001 million yuan respectively, up 247.84% and 14.30% respectively. A 25-year forecast was also introduced, with revenue of 7.532 billion yuan, an increase of 12.71%, and Guimu's net profit of 1,135 million yuan, an increase of 13.39%. The corresponding EPS for 23-25 years was 1.11, 1.27, and 1.44 yuan respectively. 40 times PE for 23 years was given, and the target price was 44.4 yuan, maintaining the purchase rating.
Risk warning: corporate governance risks, increased market competition risks, risk of fluctuations in raw material prices, food safety risks.