Orient Securities·2024-04-02 16:00Investment Rating - The report maintains a "Buy" rating for the company, with a target price of HKD 25.42 based on a 16x PE for 2024 [5][7]. Core Insights - The company reported a revenue of CNY 98.624 billion for 2023, representing a year-on-year growth of 6.5%. However, the net profit attributable to shareholders decreased by 9.3% to CNY 4.809 billion. The gross margin improved to 37.2%, up by 1.85 percentage points, primarily due to a decline in raw milk prices and an upgrade in product mix [2][4]. - The liquid milk market share continues to expand, solidifying the company's position as a high-end fresh milk benchmark. Liquid milk revenue reached CNY 82.07 billion, growing by 4.9% year-on-year. The premium product line, particularly the "Telunsu" brand, has strengthened its market leadership, while the ice cream segment also showed robust growth with revenue of CNY 6.03 billion, up 6.6% [2][4]. - The leadership change, with Lu Minfang stepping down as president and Gao Fei taking over, is not expected to affect the company's long-term strategic direction, which focuses on brand enhancement, product structure upgrades, price stability, and profit margin improvement [2][3]. Financial Summary - For 2023, the company achieved a revenue of CNY 98.624 billion, with a year-on-year growth of 6.5%. The operating profit was CNY 5.607 billion, reflecting a growth of 19.1%. The net profit attributable to shareholders was CNY 4.809 billion, down 9% year-on-year. The earnings per share (EPS) for 2023 is projected at CNY 1.22, with forecasts of CNY 1.44 and CNY 1.59 for 2024 and 2025, respectively [4][7][8]. - The gross margin for 2023 was 37.2%, with projections of 37.4% for 2024 and 2025. The net profit margin is expected to improve to 5.6% by 2024 [4][8]. Market Position and Growth Potential - The company is expected to benefit from the ongoing decline in raw milk costs and product structure upgrades, which will enhance gross margins. The long-term growth potential remains strong, particularly in the fresh milk and cheese segments, despite short-term pressures on certain product lines [3][7]. - The company is also focusing on expanding its presence in rural markets, where per capita milk consumption is expected to rise, further supporting growth in fresh milk and cheese products [2][3].