HONG KONG, March 29, 2024 – (ACN Newswire) – – Guoquan Food (Shanghai) Co., Ltd. (“Guoquan” or “the Company”; Stock Code: 2517.HK) is pleased to announce the consolidated results of the Company and its subsidiaries for the financial year ended 31 December 2023 (the “Relevant Period”).
In 2023, China’s economy has shown sustained recovery and steady improvement. Despite the challenges, which posed a threat to consumer-oriented businesses, Guoquan responded by effectively managing the supply chain and improving operational efficiency, thereby strengthening profitability. During the reporting period, Guoquan reported revenue of RMB 6,094.1 million, gross profit of approximately RMB 1,350.9 million, reflecting year-on-year growth of 8.2%, and a profit margin gross of approximately 22.2%, an improvement of 4.8 percentage points. from 17.4% in the same period of 2022. Furthermore, Guoquan achieved a net profit of approximately RMB 263.4 million, which represents an increase of 9.3% compared to the same period of 2022. Adjusted net profit increased reached approximately RMB 318.0 million, marking a year-on-year increase of 23.8%. Furthermore, operating cash flow represents a year-over-year increase of 137.7% to reach RMB678.3 million.
On November 2, 2023, Guoquan was listed on the main board of the Hong Kong Stock Exchange, marking a new development milestone. As of March 4, 2024, Guoquan officially has access to the Hong Kong Stock Connect, which is expected to increase the liquidity of the Company’s shares and gradually highlight its investment value. Furthermore, to better reward shareholders, the board of directors proposed the final cash dividend payment of RMB0.0521 per share (including taxes), with an estimated total distribution of RMB143 million, demonstrating Guoquan’s emphasis on the interests of shareholders.
Expansion of offline stores and acceleration of online channels
In terms of channels, Guoquan has established a nationwide store network to occupy market share. During the reporting period, the Guoquan store network expanded despite slowing consumption. As of the end of 2023, Guoquan had 10,307 retail stores, covering 31 provinces, autonomous regions and municipalities, a net increase of 1,086 in the number of stores compared to the end of 2022, further expanding the market influence.
Meanwhile, to empower affiliates and facilitate sales growth, as well as broaden our consumers’ reach and provide a more flexible shopping experience, we have created more online channels, including Guoquan APP, WeChat mini-program, third-party food delivery platforms, Douyin and other popular social commerce platforms. In 2023, through multi-level Douyin accounts for live streaming Guoquan products or posting related short videos, total views exceeded 6 billion times.
By establishing close online and offline connections and interactions with consumers, Guoquan has achieved a record number of members, with the top-up amount increasing by 18% every year to approximately RMB 720 million. As of the end of 2023, Guoquan had approximately 27.9 million registered members.
Continuous enrichment of the product matrix and digital intelligence that drives product innovation
Guoquan has offered diversified, tasty, convenient and affordable home meal products in a one-stop shop for consumers in a wide range of restaurant scenarios. With deep consumer insights and R&D efforts, Guoquan has worked closely with suppliers and R&D centers to constantly improve its product range to align with evolving consumer demands and preferences.
In terms of product development, Guoquan has leveraged digital tools to analyze consumer behavior, gain consumer insights, accurately evaluate market trends, and launch new products and update existing ones accordingly. Guoquan has also regularly introduced customized products for local markets to meet different consumer preferences in different regions. In 2023, Guoquan successfully launched a total of 339 new SKUs.
As of December 31, 2023, Guoquan’s product portfolio includes eight categories including hotpot products, barbecue products, beverages, solo meals, ready-to-eat meal kits, fresh products, Western cuisine and snacks, comprehensively covering the diverse culinary needs of consumers.
In 2023, Guoquan’s gross profit margin was approximately 22.2%, representing an increase of 4.8 percentage points compared to 17.4% in the corresponding period of 2022. This improvement was mainly attributable to improved control of costs resulting from Guoquan’s advantageous scale, coupled with the development of new products, the improvement of existing products and the increase in the share of self-production following the acquisition of factories.
Constantly advance the “three-sphere integrated” development strategy to consolidate market leadership
Looking ahead, Guoquan will maintain its commitment to the three-sphere integrated development strategy including brand, product and channel. This includes expanding product categories, strengthening multi-channel sales network, increasing investment in brand building and marketing, and exploring consumption scenarios to enhance consumer value and further consolidate the leadership of market. Furthermore, Guoquan aims to leverage digital tools to enhance both the upstream supply chain and downstream affiliates, aiming to provide tasty, convenient and affordable household products to a diverse consumer base across various channels and scenarios .
Specifically, in terms of channel building, Guoquan will continue to expand and deepen our multi-channel sales network to further reach consumers. Strengthen the depth and breadth of the offline store network by deepening offline market penetration in already covered regions, expanding the store network to new regions and with various store types. Further develop our online sales platforms to realize the mutual enhancement of offline and online, promoting increased sales revenue. In addition, Guoquan will continue to cultivate more entrepreneurial franchisees by encouraging our existing franchisees to open more franchise stores, promote the growth of their sales, and cultivate entrepreneurial franchise franchisees by continuously expanding to more product categories, updating our product portfolio and developing more online contacts.
Guoquan has built a diversified product portfolio in terms of product categories and consumption scenarios served, and in the future, Guoquan will continue to explore camping meals as a new consumption scenario, explore sales channels for corporate customers, and strengthen the regionalization of the home-made meal product supply chain, in order to provide a wider range of regionalized meal products to meet consumer needs.
In terms of products, Guoquan will continue to improve our R&D capacity, and continue to cooperate with upstream suppliers to improve our R&D and innovation capacity. Meanwhile, further integrate Guoquan’s upstream resources and source quality food ingredients through investment or partnership with selective and qualified Chinese and foreign food suppliers who have market potential and can achieve synergy with Guoquan, so as to strengthen key advantages competitive Guoquan.
In terms of digitalization, Guoquan will continue to enhance digitalization by further improving its procurement and fulfillment management platforms and promoting the development of its membership system, with the aim of improving its overall operational efficiency and increasing revenue growth of sales.
In terms of brand building, Guoquan will increase its investment in brand building and marketing by intensifying its marketing efforts in high-profile television advertising, offline advertising, community group buying and social e-commerce platforms to to further deepen consumer reach and increase consumer stickiness, thereby increasing brand recognition, brand awareness, brand reputation and consumer loyalty.
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