Key takeaway

In the first quarter, catering demand recovered and Anjoy’s performance accelerated again. Frozen prepared foods and prepared dishes both achieved high growth, exceeding expectations. On the product side, driven by recovering demand, major core products are expected to accelerate. Strategic new products are growing at an even faster pace, and customized products for supermarkets are gradually scaling up. On the profit side, margin improvement and cost optimization lifted gross margin. As the price war eased, the expense ratio declined and profitability improved significantly. Looking at the full year, we expect demand to stabilize and recover. With a well-structured and comprehensive channel system, strong scale of major products, and faster iteration of new products, Anjoy’s full-year revenue growth is expected to reach 15%.

Event

The company released 1Q26 earnings results. In 1Q26, the company recorded total revenue ofRMB4.71bn, YoY+30.84%; net profit attributable to shareholders of the parent companyRMB0.563bn, YoY+42.74%; net profit attributable to shareholders of the parent company excluding non-recurring itemsRMB0.525bn, YoY+53.04%.

Quick Take

Catering demand rebounds, new products flourish, peak season business growth accelerates again in 1Q26.

In the first quarter, demand from both B-end and C-end rebounded during the Spring Festival peak season. New products received positive market feedback, customized supermarket products scaled up, and revenue of the main brand accelerated again, with market share increasing. By product category, revenue in 1Q26 from frozen prepared foods, frozen prepared dishes, frozen flour and rice products, agricultural and sideline products and others reachedRMB2.717bn (+35.25%), RMB1.176bn (+40.77%), RMB0.659bn (+0.13%), and RMB0.121bn (+29.36%), respectively. In addition, newly consolidated bakery product sales from acquisitions reachedRMB0.032bn. In the first quarter, the core prepared food business achieved rapid growth. On one hand, catering demand recovered and the Anjoy brand accelerated, with major core categories expected to record strong growth. On the other hand, the consolidation of Dingweitai boosted revenue. Prepared dishes productsgrew rapidly. We expect the company’s surimi-based products to continue gaining traction and maintain high growth, while lobster-related products (lobster tails and seasoned shrimp) grew rapidly on a low base. In addition, grilled sausage remains a key category for the company, and is expected to maintain relatively fast growth.

Cost optimization lifts gross margin, easing price competition reduces expense ratio, profitability improves.

In 1Q26, the company’s gross margin increased YoY by+1.66pctsto24.99%, and net margin attributable to shareholders of the parent company+1pctsto11.96%. Mainly due to:

Gross margin: on one hand, the scale effect of production has emerged; on the other hand, promotional activities involving bundled giveaways have decreased.

Expense ratio optimization: in 26Q1 the selling expense ratio was 6.05%, YoY -0.68pcts, while the administrative expense ratio was 2.18%, YoY -0.6pcts. The price war has eased, price competition has declined, and sales accelerated during the peak Spring Festival season, with scale effects becoming more evident.

Financing expense: the increase in exchange gains and losses drove financing expense from -RMB4.7907mn to +RMB14.0619mn.

Cash flow: in 26Q1 cash received from sales was RMB5.283bn, up 21.9% YoY, net operating cash flow reached +RMB1.043bn, YoY +54.99% Products and channels jointly drive growth, expense improvement enhances profitability, and we remain optimistic about strong company performance in 2026. Performance of Anjoy continued to improve in 25Q4 and 26Q1, further verifying that catering market demand is gradually stabilizing and rebounding, while the leading player’s competitiveness continues to strengthen, taking the lead in achieving rapid earnings growth. In 26Q2, as the catering industry enters a low base period during May–June and the company’s sales momentum remains strong, we expect quarterly growth to maintain a high double-digit pace. In 2026, we expect the acceleration of core businesses to drive overall performance growth of more than double digits, while improved expense efficiency and shrinking goodwill impairment release stronger profit upside. At the product level, the new-generation lock-fresh packaging 6.0 has been successfully launched in 2026, the strategically positioned halal brand Anzhai is expected to introduce new products, and differentiated innovation in dough-based products remains promising. At the channel level, the company has established a dedicated customization division and optimized its organization, using shrimp products as an entry point to explore differentiated customized solutions across different channels and scenarios. Earnings forecast: we expect 2026-2028 revenue to reach RMB18.624bn, RMB20.544bn, and RMB22.51bn, respectively, with net profit attributable to shareholders of the parent company of RMB1.809bn, RMB2.091bn, and RMB2.361bn. The corresponding PE for 2026-2028 is 18.40X, 15.92X, and 14.09X. We maintain “buy” rating.

Risks:

1. Consumption recovery below expectations: The company’s core business has a relatively high proportion of catering clients, and a weaker recovery in catering consumption may have a certain impact on the company. If the subsequent recovery of mass-market catering falls short of expectations, it will lead to a decline in demand from B-end clients, affecting the company’s related business revenue.

2. Intensified competition in the prepared dish sector: More and more new entrants will pile in the sector as the sector recovers. The intensified market competition may increase the company's costs and weigh on its profitability.

3. Rising raw material costs: In recent years, prices of raw materials and packaging materials have fluctuated significantly, while higher freight costs per unit of product and rigid increases in employee wages may put substantial cost pressure on the enterprise. If the cost rises more than expected, it will have a significant impact on corporate profits.