Juewei Food (603517) 东海证券·2024-07-18 14:30Investment Rating - The report gives a "Buy" rating for the company, considering its strong brand influence, high market recognition, and advantages in store count and production capacity [4] Core Views - The company is expected to achieve EPS of 1.23, 1.42, and 1.60 yuan for 2024-2026, with corresponding P/E ratios of 12X, 10X, and 9X, which are lower than the industry average [4] - The company's revenue is projected to grow steadily, with 2024-2026 revenue estimated at 7.904, 8.514, and 9.097 billion yuan, respectively, with a CAGR of 8.85%, 7.71%, and 6.86% [5] - Net profit attributable to the parent company is expected to be 765.12, 877.83, and 993.93 million yuan for 2024-2026, with a CAGR of 14.73% and 13.23% [5] Industry Overview - The Chinese braised food market is expanding, with the market size expected to grow from 233 billion yuan in 2018 to 405.1 billion yuan in 2023, maintaining a steady growth rate of 9%-15% [3] - The industry is highly fragmented, with the top player, Juewei Food, holding a market share of only 5.39% in 2020, indicating significant room for growth for leading companies [3] Company Overview - The company has a stable and concentrated equity structure, with major shareholders including Shanghai Jucheng, Shanghai Huigong, Shanghai Chengguang, and Shanghai Fubo, holding 32.94%, 7.80%, 2.67%, and 2.44% of the shares, respectively [23] - The company has implemented equity incentive plans to motivate employees, with 847,800 stock options granted in 2022, covering 178 key employees, including 2 executives and 176 core staff [24] Business Strategy - The company follows a "land grab" strategy, rapidly expanding its store network, with the number of stores increasing from 1,000 in 2008 to 5,000 in 2013 [28] - The company is focusing on improving single-store revenue while maintaining steady store expansion, with the total number of stores reaching 15,950 in 2023, a net increase of 874 stores [80] Financial Performance - In 2023, the company achieved revenue of 7.261 billion yuan, a year-on-year increase of 9.64%, and net profit attributable to the parent company of 344.31 million yuan, a year-on-year increase of 46.63% [5] - The company's gross margin was 24.77% in 2023, down 0.80 percentage points year-on-year, mainly due to rising raw material costs, but is expected to improve in 2024 [67] Market Expansion - The company is actively expanding into lower-tier cities, with about 60% of its stores located in first- and second-tier cities, leaving significant room for growth in third- and fourth-tier cities [31] - The company has established 22 production bases (including 3 under construction), each covering a radius of 300-500 kilometers, ensuring efficient supply chain management [118] Product and Brand Strategy - The company's main revenue comes from fresh food products, with poultry products accounting for 72.71% of fresh food revenue in 2023 [84] - The company is targeting the "Z generation" as its main customer base, launching various flavored products and collaborating with popular IPs to attract younger consumers [122] Competitive Landscape - The braised food industry is highly fragmented, with the top three companies holding only 3.66% of the market share in 2020, indicating significant room for consolidation [172] - The company's main competitors include Zhou Hei Ya and Huang Shang Huang in the leisure braised food segment, and Zi Yan Food in the meal braised food segment [162]