Guoquan's Net Profit in 2023 Reaches CNY 318 Million, Marking a 23.8% Year-on-Year Growth

On the evening of March 28th, Guoquan Food (2517:HK) released its first financial report since going public. The data shows that in 2023, Guoquan achieved a revenue of CNY 60.94 billion. The adjusted net profit was CNY 3.18 billion, marking a 23.8% year-on-year increase. The gross profit was CNY 13.51 billion, up by 8.2% year-on-year, with a gross profit margin of 22.2%, compared to 17.4% for the same period in 2022.

During the reporting period, Guoquan's cash reserves increased from 12.63 billion yuan in 2022 to CNY 19.35 billion, and cash generated from operating activities rose from CNY 2.85 billion in 2022 to CNY 6.78 billion. The net assets in 2023 amounted to CNY 33.79 billion, and the asset-liability ratio decreased from 4.9% in 2022 to 3.3%.

The steady growth in Guoquan's operational data is mainly attributed to improved bargaining power under economies of scale, the vertically integrated supply chain building quality, safety, and cost advantages, as well as the upgrade of product structure.

Despite the challenging economic environment in 2023, Guoquan's omni-channel sales network continued to deepen and expand. According to the financial report, as of December 31, 2023, Guoquan had 10307 terminal stores, covering 31 provinces, autonomous regions, and municipalities in mainland China. The increased density of the store network has also improved the efficiency of logistics and transportation. In the logistics sector, Guoquan achieved next-day delivery to the vast majority of its stores nationwide through 15 regional distribution centers spread across the country.

Additionally, the financial report reveals that in 2023, Guoquan introduced 339 new SKUs, representing an increase of over 40% compared to the same period last year. The product categories covered include seasonings, condiments, meatballs, seafood products, meats, vegetables, beverages, and cookware. In the previous year, Guoquan deeply cultivated consumer market trends, observed changes in consumer demand, continuously enriched its product portfolio through the C2F model, and regularly launched new products tailored to regional markets to meet the unique preferences of consumers in different areas.

On the consumer end, Guoquan continued to develop and operate the Guoquan app, WeChat mini-program, Douyin, and other new media social platforms, and conveniently reached users through third-party online platforms to enhance the shopping experience. Currently, Guoquan has a total registered membership of 27.9 million and a pre-deposit amount of CNY 700 million on savings cards, representing an 18% year-on-year increase.

In 2023, Guoquan continued to vertically integrate its supply chain, creating an industrial ecosystem, and bridging supply and demand through the "third industry driving the second industry to promote the first industry" approach. Currently, Guoquan's supply chain system covers upstream production, midstream distribution, and downstream terminal sales networks. The integrated supply chain covering raw material procurement, production processing, and distribution has helped Guoquan reduce costs, improve operational efficiency, and enhance the quality and stability of product supply.

Upstream, Guoquan has established deep cooperation with nearly 300 food ingredient suppliers, including dozens of listed food companies. Simultaneously, Guoquan has acquired three food processing plants, invested in one food processing plant, continuously optimized management efficiency, and enhanced quality control capabilities. Based on this, Guoquan has innovatively developed the "single product, single factory" cooperation model, significantly improving the production process, quality, and supply capabilities of individual products. Currently, most SKUs sold in Guoquan stores are produced under the "single product customized processing" model. In the midstream and downstream, Guoquan has established a one-stop supply chain system integrating "store-warehousing-logistics-factory," strengthening quality control, safety, timeliness, and effectively managing costs.

Benefiting from Guoquan's long-term stable relationships with suppliers and comprehensive control over product production, Guoquan continues to provide consumers with high-value dining solutions that are "convenient, delicious, and affordable." Its sustained, steady growth performance and high-quality development prospects have been recognized by the market. On March 4, 2024, Guoquan was officially included in the list of Hong Kong Stock Connect stocks under the Shanghai-Hong Kong Stock Connect, further increasing market attention, and highlighting its scarcity value in the Hong Kong capital market.

In the future, Guoquan will continue to expand its omnichannel sales network, develop consumer scenarios, strengthen R&D capabilities and upstream supply chain construction, deeply cultivate community dining digitization, and share delicious products from their places of origin. Additionally, it will embark on opening new stores in overseas areas such as Indonesia, Thailand, Malaysia, and the Philippines.

As of the time of writing, Guoquan's stock is priced at HKD 5.5 per share, with a total market value of HKD 15.11 billion.