The bottom line is that Sichuan Diversification made a double effort. For the first time, it covered the B-side and C-side of the channel side to give companies an “increase in weight” rating, continuously enriching the product and brand matrices and searching for new growth points. We expect the company's net profit for 2024-2026 to be 0.545 billion yuan, 0.652 billion yuan, and 0.763 billion yuan, respectively, +19.5%, +17.1% compared to the same period, and EPS of 0.51, 0.61, and 0.72 yuan respectively. The PE corresponding to the current stock price is 22, 19, and 16 times, respectively, giving the first coverage a “gain” rating.

Industry perspective: The industry scuffle is over, and polymorphic companies that have looked at diverse categories and channel integration for a long time are expected to break through the short-term development pace of the polymorphism industry, which is slightly disrupted, and the long-term BC side development logic remains unchanged. 1. From the perspective of industry space, we believe that the long-term development logic of the polymodulation industry has not changed. However, judging from the pace of development, there have been two changes: (1) the increase in industry volume has become the main driving force for growth; (2) the importance of B-side channel development has increased; 2. From the perspective of supply and demand, the complex industry has ended the scuffle and entered a new stage of pattern optimization. We believe that leading companies with a leading edge in the melee are expected to accelerate the harvest of market share and prioritize benefits as demand recovers. Industry mergers and acquisitions continue to emerge as iconic events of pattern optimization; 3. Benchmarking Japan's Ajinomoto development path, in the long run, we believe that polymorphic companies with diverse categories and integrated channels are expected to break through.

Looking forward to the future: Endogenous and extrinsic expansion. The simultaneous promotion of channel products supports revenue growth. At this point, we have split the drivers of Tianwei Foods' revenue growth. The growth drivers mainly include two aspects: (1) endogenous growth: product+channel supports the company's endogenous growth. On the product side, the company consolidates the national big single product strategy, and is expected to achieve product drive; at the same time, in the long run, the company is expected to use the group meal channel as an entry point to test the waters of the pre-prepared food business and find a second growth curve; in terms of channels, the company uses the C-side as the basic platform, and the national layout still has a large space, while focusing on the layout of channels with a relatively low proportion of B, small B, e-commerce, etc. The company has set up a special e-commerce division to break through the offline small B channel with the Dahongpao brand focus, and the food extract brand complements small B (2) channels; Extended development:

It mainly includes outward mergers and acquisitions and investments. The company is expected to complement products and channels through mergers and acquisitions and investments, diversify products and channels, and build a multi-brand matrix.

Risk warning: Macroeconomic downturn, industry competition intensifies, raw material costs rise.