2023Q1-3 under the influence of multiple factors, the company's revenue-profit continues to be under pressure, and Q4 revenue growth is expected to accelerate month by month. In the long run, the market pattern in South China will improve, and the commissioning of factories in Fujian and Guangxi next year is expected to help companies seize market share and accelerate regional sales growth. at the same time, the company tries to embrace snack peddlers' channels to send positive signals. Continue to pay attention to the trend of raw material price, capacity landing, transportation rate & return rate.

2023Q1-3 revenue / net profit compared with the same period last year + 0.77% Maxime 6.24%. 2023Q1-3 realized total operating income of 5.066 billion yuan, year-on-year + 0.77%; return to the mother net profit of 459 million yuan, year-on-year-6.24%, deducting non-net profit of 443 million yuan, year-on-year-9.01%. Among them, 2023Q3 achieved total operating income of 1.86 billion yuan, year-on-year + 2.1%; return to the mother net profit of 168 million yuan, year-on-year + 26.8%; deducted non-net profit of 162 million yuan, year-on-year + 11.1%.

The core market continues to be under pressure, with South China performing brightly. Affected by the outflow of population from the core market, weak consumption power, channel changes and other factors, the company's growth continued to be under pressure in the first three quarters. 2023Q1-3's revenue in northeast China is 2.18 billion yuan,-2.0% year-on-year (23Q3-0.7%), and the core market is still a drag on the company's revenue growth; North China's revenue is 1.16 billion yuan, + 3.4% year-on-year (23Q3 + 2.5%), and its performance is relatively stable.

East China's income is 1.58 billion yuan, + 9.5% year-on-year (23Q3 + 3.6%), or due to the increase in the number of summer travelers, East China's growth has slowed down in a short period of time; South China's income is 420 million yuan, + 7.8% year-on-year (23Q3 + 14.8%). We believe that the acceleration of South China growth is mainly due to the optimization of regional competition. The income of Central China / Southwest / Northwest China is 1.6 million yuan and + 9.4% plus 9.4%, 5.0% and 0.3% respectively (23Q3 + 9.2%, 1.7% and 4.1%) respectively. In terms of the number of dealers, 2023Q1-3 added 36 dealers (23Q3 added 17).

The high price of raw materials fluctuates, and the profit pressure still exists. 2023Q1-3 gross profit margin year-on-year-0.6 PCT to 23.3% (23Q3 year-on-year + 1.3 PCTs to 23.0%), Q3 gross profit margin slightly lower than the previous year, mainly due to high cost prices of raw materials such as flour and sugar; sales expense rate was basically flat year-on-year (23Q3 year-on-year-0.4PCT), management expense rate was + 0.3 PCT year-on-year (23Q3 year-on-year + 0.2 PCT), in addition, net investment income increased by 18.73 million yuan (23Q3 increased by 20.05 million yuan). Under the combined impact, the net interest rate of 2023Q1-3 is-0.7 PCT to 9.1% (23Q3 + 1.8 PCTs to 9.0%).

Business pressure is still there, looking forward to the development of new areas & new channels. 2023Q1-3 consumer demand is weak, the core northeast market population outflow, superimposed traditional channel flow decline, the company's growth pressure, but September growth has improved compared with July-August, sales performance is good during the National Day holiday period, Q4 revenue growth is expected to accelerate month by month. At the industry level, facing the pressure of the macroeconomic environment, the short-term protection baking pattern has been continuously optimized since the beginning of the year, such as Mankerton withdrawing from the South China market, Dali-Panpan shrinking the short-term protection baking business, we believe that with the commissioning of factories in Fujian and Guangxi next year, the company's market share in South China will continue to increase, and South China's growth is expected to further accelerate. In addition, the company actively embraces the channel change, through the PICC products into part of the snack hawking system, looking forward to continue to promote the layout of new channels. At the profit end, Q4 major raw materials basically completed price locking, gross profit margin is expected to remain stable, continue to pay attention to raw material prices, capacity climbing, transport rates-return rate improvement trend.

Risk factors: rising cost of raw materials; lower-than-expected development of emerging markets; lower-than-expected production capacity; deteriorating competition pattern; slowing macroeconomic growth.

Investment suggestion: taking into account the weak demand and cost pressure after the epidemic, adjust the company's EPS forecast for 2023-2025 to 0.39max 0.45max 0.52 yuan (the original forecast is 0.48kg 0.58kg 0.67 yuan). Taking into account the company's historical valuation hub (static PE valuations in 2016-2021 are all more than 30 times) and the current performance pressure, the company is given 28 times PE in 2023, corresponding to the target price of 11 yuan, maintaining a "buy" rating.