YouYou Foods(SH:603697) KAIYUAN SECURITIES·2025-03-04 06:23Investment Rating - The report initiates coverage with an "Accumulate" rating for the company [4][10]. Core Views - The company is actively innovating to seek new growth points, with a potential turning point in performance growth expected in 2024. The core business of spicy chicken feet remains stable, and new product development is anticipated to create a second growth curve [4][5]. - The market for spicy chicken feet is large, with significant growth potential as the product evolves towards a more casual consumption style, appealing to a younger demographic [4][47]. Summary by Sections Company Overview - The company has been focused on spicy chicken feet for over 20 years, establishing a strong competitive advantage in the Southwest region. It has achieved a sales scale of approximately 1 billion yuan [4][23]. - The management structure is stable, with a concentrated ownership that supports long-term development [25][27]. Business Performance - The core product, spicy chicken feet, accounted for 74.8% of revenue in 2023, with other products like pig skin jelly and chicken wings contributing to revenue growth [29][32]. - The company is expanding its market presence beyond the Southwest, with significant growth in the East China region, where revenue has increased from 13.4% to 27.4% from 2015 to 2023 [34][36]. Financial Performance - Historical performance has shown volatility, with revenue growth from 7.5 billion yuan in 2015 to 12.2 billion yuan in 2021, but a decline in 2022-2023 due to macroeconomic factors. A recovery is expected in 2024 with a projected revenue increase of 16.8% [38][41]. - Raw material costs, particularly for chicken feet, significantly impact profitability, with raw materials accounting for 81.1% of operating costs in 2023 [39][44]. Industry Analysis - The spicy chicken feet market is expected to grow, with a projected market size of 222.9 billion yuan in 2023, driven by increasing consumer demand and the expansion of the product's appeal [47][50]. - The competitive landscape is fragmented, with many small to medium-sized enterprises, while the company stands out as a leading player with a revenue scale around 1 billion yuan [60][63]. Future Trends - The industry is poised for growth as consumer preferences shift towards more casual and diverse snack options, particularly among younger demographics [65][69]. - New product innovations and the expansion of sales channels, including e-commerce and membership-based supermarkets, are expected to drive future growth [73].