The performance hit a new high, the net profit doubled, and Panda Dairy promoted high-quality development with new quality productivity

On the evening of April 24, Panda Dairy (300898. According to the 2023 annual report, the company achieved operating income of 947 million yuan, a year-on-year increase of 6.20%, a net profit attributable to the parent company of 109 million yuan, a year-on-year increase of 104.11%, a non-net profit of 91.7199 million yuan, a year-on-year increase of 101.27%, and a net cash flow from operating activities of 184 million yuan, a year-on-year increase of 475.72%, all of which hit a record high.

Previously, Panda Dairy has stated in the performance forecast that during the reporting period, the company's main business continued to grow steadily, the prices of main raw materials fell, the company's operating costs decreased, and the gross profit margin of products increased, which promoted the company's net profit to rise year-on-year.

The company also released the first quarter report of 2024 at the same time, and the company achieved a net profit attributable to the parent company of 26.5661 million yuan in the first quarter, a year-on-year increase of 38.61%. In 2023, the national catering revenue will be 5,289 billion yuan, an increase of 20.40% year-on-year, which will play a significant role in driving GDP. With the strong recovery of the catering industry, the upstream industry has been developing steadily and improving, and the market expansion has been steadily accelerating. As an upstream enterprise in the catering industry, Panda Dairy will continue to strengthen product research and development and channel expansion in 2023, and promote the company's high-quality development with new quality productivity.

The market recovery drove the positive performance

Founded in 1996, Panda Dairy has been deeply involved in the research and development, production and sales of condensed milk for more than 20 years, and was awarded the "China Time-honored Brand" in February 2024. At present, the company has formed a matrix of four categories with "condensed milk as the mainstay, cream, cheese and plant-based as the second growth curve", and has condensed milk series, evaporated milk series, cheese series, cheese yogurt, coconut milk series, coconut water beverage and other products.

In 2023, the company's main business, the revenue of concentrated dairy products will be 651 million yuan, a year-on-year increase of 9.24%, accounting for 68.72% of revenue. The financial report pointed out that seven of the mainland's milk consumption has become liquid milk, and the product shelf life is shorter, which is prone to cyclical fluctuations due to supply and demand. At present, the downstream customers of concentrated dairy products of Panda Dairy are mainly food processing enterprises, bakeries, restaurants, beverage stores and household consumption, among which, the sweetened condensed milk, evaporated milk and other products subdivided by the condensed milk business have covered various consumption scenarios in high, medium and low-end consumption scenarios, while the light cream business has been widely used in new consumption fields such as baking, coffee and tea. Thanks to the continuous recovery of the downstream market in 2023, the company's concentrated dairy segment has achieved rapid growth.

In recent years, driven by the upgrading of milk consumption and the standardization of catering, the development space of concentrated dairy products has been further released, and the rise of tea and baking industries has led to the growth of condensed milk as a food raw material. In order to comply with the development trend of the industry, Panda Dairy has made adjustments and optimizations in the channel layout. Distribution modelAs the company's main sales method, in 2023, Panda Dairy will vigorously promote the sinking of dealer channels, deepen the layout of the distribution network, and continue to launch new products to drive new distributors. At the end of the reporting period, the number of contracted dealers was 367, an increase of 55 over the same period last year. At present, the company has built sales channels covering more than 30 provinces across the country, of which East China and South China are advantageous markets, with 155 and 78 dealers respectively, and other regions continue to promote expansion, with a total of 134 dealers during the reporting period, an increase of 29 over the same period last year. In 2023, the company will achieve revenue of 522 million yuan through the distribution model, a year-on-year increase of 4.35%, and a gross profit margin of 33.34%, a year-on-year increase of 7.65 percentage points.

Under the direct sales model, the company has established long-term and stable cooperative relations with large enterprises such as Xiangpiaopiao, Mengniu, Weiquan, Ligao, Xizhilang, and Luxue, and extended its business to well-known new consumer enterprises such as Yuanqi Forest, Ancient Tea, Yihetang, and Nova Coffee. For direct sales customers, Panda Dairy adopts a differentiated marketing strategy, provides them with customized services, and customizes special product specifications and packaging according to different product needs, so as to be close to the actual application scenarios of products. In September 2023, Panda Dairy and Bailian Yike Convenience Store launched a joint cooperation to jointly launch nearly 10 innovative bakery products, special bento boxes and tea drinks inspired by Chinese elements such as "panda" and "bamboo", and with the concept of health, freshness and deliciousness, to further penetrate diversified channels, enrich the product line of catering channels, and enhance young consumers' awareness of time-honored brands.

In addition, Panda Dairy is also gradually improving its online channel layout, and has opened Tmall flagship stores, Douyin stores, Xiaohongshu stores, Pinduoduo stores, etc., with the main sales products being condensed milk, cheese, coconut milk and other products, with sales revenue of 5.072 million yuan during the reporting period. It is reported that in the future, Panda Dairy will focus on e-commerce marketing and increase the development of online distributors.

Diversified layout opens up development space

In addition to the overall recovery of the consumption environment, the growth of Panda Dairy's performance also benefited from the company's continuous strengthening of innovative R&D capabilities and forward-looking and innovative layout based on keen insight into industry trends and market demand.

In recent years, Panda Dairy has adhered to the R&D investment in new products and technologies, and improved the research level and technological achievement transformation ability under the combination of production, education and research mode, and as of the end of the reporting period, the company has obtained 87 patents. In order to enhance R&D strength and enrich the product matrix, Panda Dairy has established production bases and R&D centers in Zhejiang, Shandong, Hainan and other places, and set up sales and application technology service centers in Shanghai. The addition of original (remade) mozzarella cheese, cream cheese and other series of products has promoted the continuous optimization of the company's product structure. In 2023, the company's R&D expenses will be 17.3408 million yuan.

At the same time, in addition to expanding and strengthening the main business of concentrated dairy products, the company actively opens up new tracks such as cheese and plant-based. In terms of the development of new cheese products, Panda Dairy has set its sights on the snack food market, creating a 3-year-old + children's snack brand "Red Panda Companion" based on cheese sticks, and a young leisure snack brand "Nothing Cheese Cheese" developed with cheese as the main element. According to the data of Zhiyan Consulting, the total domestic demand for cheese has increased from 121,800 tons in 2015 to 308,900 tons in 2022, and the cheese market size in 2022 will be 11.18 billion yuan, and the nutritional value of cheese itself has been widely recognized by consumers. Panda Dairy said that the cheese industry is currently in a stage of rapid expansion, and the cream industry is also in the stage of domestic substitution, and will maintain a high degree of prosperity in the future. The company has a layout in the field of cheese and cream, and the cheese and cream segment is gradually becoming a new growth point for the company's concentrated dairy business.

In addition to the cheese range, plant-based has also grown from zero to one in the last two years. According to the "Kerry 2024 China Flavor Atlas", coconut flavor is one of the mainstream flavors in tea, coffee and dairy products in the past five years, and with the continuous improvement of consumers' requirements for nutrition and health, the growth of the plant-based market has good development prospects. Based on the long-term optimism about the prospects of the plant-based market, in 2021, Panda Dairy launched raw coconut milk and thick coconut milk for ready-to-drink channels such as tea and coffee, and successfully signed contracts with major customers one after another, and in 2022, the coconut business gradually increased in volume, with revenue increasing by more than 20% year-on-year. It is reported that the successive development of catering customers and the increase in original customer orders are the main reasons for the rapid growth of the business in this sector. In 2023, the company's coconut product revenue will be 77 million yuan, a year-on-year increase of 23.58%, accounting for 8.10% of operating income.

In October 2023, Panda Dairy said that the growth of the plant-based business of Hainan company exceeded expectations. The Hainan factory has added and upgraded some equipment, increased product variety, and paid more attention to the changes and innovations in the taste of related products to meet the new product needs of partners, and actively expand new customer groups.

At the 27th China International Food Additives and Ingredients Exhibition and the 110th National Sugar and Liquor Fair held last month, Panda Dairy launched a new product, the plant-based series of products "Zhichun Era", which was sought after by the audience. Previously, the company has launched a plant-based milk product developed with the concept of "light health", which has been well received by the market, and another product, Coconut Milk has won the gold medal of the World Food Quality Evaluation Conference.

It is worth noting that based on the increase in performance in 2023, Panda Dairy plans to distribute a cash dividend of 5.00 yuan to all shareholders for every 10 shares, totaling 62 million yuan. It is reported that since the company was listed in 2020, the dividend amounts in the past three years have been 24.996 million yuan, 25.033 million yuan and 62.00 million yuan respectively, accounting for 32.32%, 46.87% and 56.87% of the net profit respectively, and the proportion has been increasing, continuing to give back to shareholders and further enhancing the confidence of the capital market.