On the evening of April 15th, Longda Food (002726. SZ) announced its first quarter report for 2024, which showed that the company achieved revenue of 2.523 billion yuan in the first quarter and a net profit attributable to the parent company of 30.3487 million yuan, an increase of 43.24% over the same period last year. The company strictly controlled the breeding cost, optimized the production capacity of the slaughterhouse, increased the channel development of high-margin customers, and achieved a significant increase in profitability in Q1.
The company said in a recent investor exchange: "The performance of the first quarter report is brighter, one is because the cost control of the breeding end is better, and the overall cost is reduced compared with the same period last year; In addition, the food sector maintained good growth in the first quarter, seized the Spring Festival peak season, and the sales of Spring Festival gift boxes exceeded expectations, coupled with the company's product upgrades for some traditional old products, driving the sales of online new retail and offline supermarket channels, and the prefabricated food business also maintained a rapid growth rate through the strategy of consolidating the old and opening up the new. ”
The food sector got off to a good start in the first quarter, focusing on the layout of high-margin products and channels
Overall, the revenue of Longda's gourmet food sector in the first quarter was 679 million yuan, an increase of 30.63% over the same period of last year, of which 575 million yuan was prepared food, an increase of 25.52% over the same period of last year, accounting for 22.79% of the revenue of the main business, and the food sector grew rapidly in the first quarter.
According to reports, the food sector ushered in a bright "good start", one of the main reasons is that the company around the New Year's sales, actively stocked, upgraded the Spring Festival gift box, added a series of sauce and marinade products and Laiyang local characteristic gift boxes, sales exceeded expectations, and the online gift box business doubled. In addition, the company also launched a series of fresh meat sausages before the Spring Festival, and through activities such as anchor delivery and offline community group buying, the sales volume exceeded tens of millions in less than 2 months after its launch, demonstrating the outstanding product power of Longda cuisine that is popular in the market.
In terms of prepared food business, the company focused on the development of semi-finished dishes and finished dishes with high gross profit in the first quarter, aimed at the Western-style fast food channel, and increased the promotion of grilled sausage products, with a year-on-year growth rate of more than 30%. Core customers such as Western food, barbecue, hot pot and Chinese food have maintained a growth rate of about 20%-30% through the expansion of categories and the introduction of new products, and at the same time, they are also continuing to develop middle and waist and new fast food chain customers, some of which have been supplied through early sample delivery.
Longda Gourmet said that the company will continue to increase investment in the food sector this year to enhance the endogenous growth momentum of the food sector. In terms of products, grilled sausage products increased by more than 35% in the first quarter over the same period last year, and fatty sausages, crispy meat, bacon and meatballs also showed varying degrees of growth.
After that, according to the development trend and market opportunities of the industry, Longda Gourmet will optimize and upgrade the quality of the old products, focusing on the development and design of healthy leisure products such as low-fat, low-salt, and "0 addition concept" in Western-style baking and fitness tracks, so as to further improve the product system. At the same time, we will continue to strengthen the strategy of large single products, continue to develop new products in subdivided categories around the "131" large single product strategy, focus on the promotion of large single products such as crispy meat, fat sausages, and meatballs, continuously optimize the process, enhance product strength, and create core standard products for circulation.
In terms of channels, the company adheres to the strategy of focusing on the B-end and supplemented by the C-end, and the big B-end will continue to promote the policy of "consolidating the old and opening up the new", and at the same time develop the middle and waist and the new restaurant chain enterprises or Western-style baking enterprises with good growth. The small and medium-sized B-side will further enhance the scale of the small and medium-sized B by continuously expanding the number of dealers, optimizing the customer structure, and gradually cultivating the core dealer system. Through the simultaneous development of online and offline, the C-end shapes and strengthens consumers' "Longda Food" brand mentality.
The industry is now rebounding to signal that the "one body, two wings" strategy has thickened profit margins
Industry insiders pointed out that the price of live pigs is mainly affected by market supply and demand, and generally 3-4 years is a pig cycle. From the perspective of the whole cycle, the loss in 2023 is caused by the high profits in 2020 to attract a large amount of capital into the pig industry, resulting in overcapacity, which is the objective law of the industry. Pig breeding is a typical cyclical industry, under the spontaneous adjustment of the market mechanism, the pig breeding industry is cyclically fluctuating. Dragged down by this round of ultra-long pig cycle, pig enterprises have suffered deep industry losses.
In order to better stabilize the impact of industry cycle fluctuations and drive long-term high-quality development, Longda Gourmet has established a "one body, two wings" strategy with food as the main body, and in 2024, the company will further optimize the "top-level design" of the three major businesses of breeding, slaughtering and food, and continue to promote production capacity optimization, cost reduction and efficiency increase.
Specifically, the company will take a variety of ways to control costs and flexibly adjust the scale of the breeding sector, and at the same time adopt a differentiated strategy to increase the number of pigs with premium ability to reduce the impact of cycle fluctuations; The food sector is the most important development direction of the company, and the company will continue to expand and strengthen the food business from quality control, R&D, channels and products, so as to provide new growth momentum for long-term development.
After more than a year of market downturn, the recent hog market has finally ushered in the dawn of recovery. The latest data shows that from January to March this year, the average sales price of commercial pigs of a number of listed pig breeding enterprises has risen month-on-month for three consecutive months. With the continuous growth of the cumulative range of production capacity in the industry, the inflection point of the pig cycle is becoming clearer.
Wanjia Fund pointed out that the rebound in pork prices, the short-term logic lies in the recent pig price more than expected rise, March is the seasonal off-season, pig prices do not fall but rise, up 8.4% in a single month. The long-term logic lies in the continuous reduction of pig production capacity, and this round of the cycle is basically close to the end of production capacity reduction, and the cycle inflection point is gradually approaching. It is expected that pig prices will start in advance in the second quarter, and the operating conditions of most pig enterprises are expected to be significantly better than in 2023. Taking into account many considerations, some enterprises and institutions are cautiously optimistic about the performance of pig prices in the future.
Analysts believe that the Longda gourmet food sector has a higher gross profit margin than the traditional business, and feeds back the pig breeding and slaughtering business, and the three major sectors under the strategic pattern of "one body and two wings" achieve organic synergy. With a more integrated and growing industrial value chain, the company will have more significant profit growth space when the pig cycle bottoms out in the future.
On April 15, 2024, the board of directors of Longda Gourmet formulated the company's "Shareholder Dividend Return Plan for the Next Three Years", which will provide shareholders with a clearer and more stable cash dividend expectation, share the fruits of development with shareholders, ensure that the interests of all shareholders, especially small and medium-sized shareholders, are fully protected, and demonstrate respect for the interests of shareholders and confidence in the company's future development.
"Although the current industry has begun to see the light of day at the bottom, it will take some time for the overall performance of pig enterprises to recover after this round of the long pig cycle 'severe cold'. Longda Gourmet said that in the future, the company will continue to promote the traditional business to reduce costs and increase efficiency, and actively respond to changes in the external environment, the company's food sector as a new growth pole continues to grow in volume, with a unique industrial value chain, Longda Gourmet will have more resilient and stronger growth momentum, looking forward to the later period, or will show a positive market trend.
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