Juewei Food (SH:603517) Soochow Securities·2024-05-06 07:30Investment Rating - The report initiates coverage with a "Buy" rating for the company, anticipating a relative performance exceeding the benchmark by more than 15% over the next six months [10][25]. Core Views - The company is experiencing pressure on single-store performance due to weak demand, leading to store closures and adjustments. However, there is an expectation of profit margin improvement driven by cost reductions in key products [2][13]. - Revenue forecasts for 2024-2026 are projected at 77.1 billion, 83.3 billion, and 90.7 billion yuan, respectively, with year-on-year growth rates of 6.2%, 8.0%, and 8.8% [2]. - The net profit attributable to shareholders is expected to reach 7.3 billion, 8.8 billion, and 10.1 billion yuan for the same period, reflecting significant growth rates of 111.2%, 21.6%, and 14.5% [2]. Financial Performance Summary - In 2023, the company achieved total revenue of 72.61 billion yuan, a year-on-year increase of 9.64%, and a net profit of 3.44 billion yuan, up 46.63% [12][28]. - The company reported a net profit margin of 4.74% for 2023, with a gross margin of 24.77%, indicating a slight improvement in profitability metrics [13]. - For Q1 2024, the company recorded revenue of 1.695 billion yuan, a decrease of 7.04% year-on-year, while the net profit rose by 20.02% to 165 million yuan [28]. Revenue Breakdown - In 2023, the revenue from packaging products, franchise management, fresh goods, and other main businesses was 2.82 billion, 0.83 billion, 5.768 billion, and 0.974 billion yuan, respectively, with year-on-year growth rates of 32.75%, 11.38%, 6.09%, and 33.82% [1][2]. - The average revenue per store decreased by 1.56% to 371,800 yuan, reflecting the challenges faced in the retail environment [1]. Cost and Margin Analysis - The report highlights a decrease in the cost of key products, particularly duck necks, which has contributed to a recovery in profit margins in Q1 2024, with a gross margin of 30.03%, up 5.73 percentage points year-on-year [13]. - The company is actively working to improve store efficiency through promotional activities on platforms like Douyin [1]. Cash Flow and Valuation Metrics - Operating cash flow for 2023 was reported at 420 million yuan, with projections for 2024 reaching 1.019 billion yuan [8]. - The price-to-earnings (P/E) ratio is expected to decline from 36.57 in 2023 to 12.44 by 2026, indicating an improving valuation outlook as earnings grow [2][8].