27 Mar 2024

NFI’s FY23 topline was up by 7% YoY to Rmb1,845m. Offline sales, which accounted for 54.2% of FY23 sales (FY22: 53.6%), recorded a 8.4% YoY increase last year on the back of i) 48.1% surge in sales from new channels such as the distributor and direct-selling model from Rmb179m in FY22 to Rmb266m, offset by ii) a 1.1% YoY drop in concessionary counter sales to Rmb734m due to continued challenges from E-commerce. Online sales, which accounted for 45.8% of FY23 sales (FY22: 46.4%), recorded a 6.1% YoY increase last year to Rmb845m, as the company strengthened its promotion on its main products. GPM was up slightly by 0.1ppt YoY to 64.0% despite a slight increase in RM. S&D cost ratio was down by 3.2ppt YoY to 48.6%, on the back of higher revenue while overall S&D costs just up by 0.7%. Admin cost ratio was up by 0.8ppt YoY to 5.4% as i) increase in D&A of its Nansha plant; and ii) increase in additional tax related to property tax and VAT. As a result, NP was up by 30.8% YoY to Rmb152m in FY23, 8% higher than our original estimates of Rmb141m. The company declared a final dividend of Rmb0.0323/share. (FY22: nil).

CROSBY Research – Natural Food International (1837 HK/BUY): Better than expected FY23 results