Event

On October 27, 2023, I would like you to release the half-yearly report of 2023.

Main points of investment

The performance is in line with expectations, the profit and loss in the third quarter narrowed 2023Q1-Q3 's total revenue by 1.091 billion yuan (up 12%), and the mother's net profit was-41 million yuan (a year-on-year loss reduction of 13 million yuan), of which 2023Q3's total operating income was 390 million yuan (up 9%), and its mother's net profit was-23 million yuan (a year-on-year loss reduction of 33 million yuan). The performance was in line with expectations, and profits were under short-term pressure. On the profit side, 2023Q1-Q3 gross margin 25.87% (+ 1pct), net margin-4% (+ 2pct); 2023Q3 gross margin 29.42% (+ 5pct), net margin-6.01% (+ 10pct). On the expense side, the 2023Q3 sales expense rate is 25.45% (+ 1pct), the management expense rate is 7.58% (- 0.5pct), and the proportion of business tax and surcharge is 1.19% (+ 0.1pct). On the cash flow side, the net cash flow of 2023Q1-Q3 operating activities is 279 million yuan (2022Q1-Q3 is-183 million yuan), which is due to the lower payment for goods purchased in this period, and the net cash flow of 2023Q3 operating activities is 99 million yuan (2022Q3 is-213 million yuan). By the end of 2023Q3, the contract liability was 51 million yuan (month-on-month ratio + 1%).

Focus on red jujube + healthy lock fresh food, optimize and upgrade through all channels

The company focuses on creating a strategic item "Red Pie"-a healthy and leisure snack that is more suitable for Chinese people, their own energy bars, and open up the company's second growth curve. Since May 2023, strategic single product sales have exceeded 10 million yuan for many months in a row, and the cumulative e-commerce sales of Hongxiaopai series products have exceeded 100 million yuan on the first anniversary of the launch. The company focuses on developing quality channels such as Shang Chao (Tianhong, Aeon, Dennis), convenience stores (whole family, 7-11, Rosen), snacks (busy snacks, snacks Youming, Dai Yonghong) and so on. The company focuses on red jujube + healthy locked fresh food, adheres to the "1x N" brand strategy, carries out marketing activities through offline high-quality channels and online new media platforms, and increases the exposure of large single magenta pie. In the first half of the year, the cumulative exposure of online topics "miss you jujube" exceeded 34 million.

Profit forecast

We are optimistic about the company's products and channels two-wheel drive, power new retail and snack franchise channels. It is estimated that in 2023-2025, the EPS will be 0.01max 0.08 EPS 0.13 yuan, and the current share price corresponding to PE will be times that of 649-96-59, maintaining the "buy" investment rating.

Risk hint

Macroeconomic downside risks, raw material rising risks, less-than-expected growth of new products, etc.