Incident: The company 24H1 achieved revenue/net profit attributable to mothers/net profit deducted from mother of 5.08/0.29/0.228 billion yuan, +75.4%/88.6%/211.8% year-on-year. In response to 24Q2, revenue/net profit without return to mother was 1.43/-0.019/ -0.035 billion yuan. Revenue was +43.9% year-on-year, while net profit attributable to mother/net profit after deduction of net profit and net profit not attributable to mother decreased losses of 0.019/0.028 billion yuan, respectively. Both revenue and profit fell above the median forecast, in line with market expectations.

Comment:

Online channels continue to grow at a high level, validating high-end cost performance strategies. Online 24H1 companies achieved revenue of 1.08/0.79/1.22 billion on Tmall/JD/ Douyin respectively, compared with +28.3%/20.3%/180.7%. Under the high Tmall JD comprehensive e-commerce base, Douyin continued its high growth trend. The offline 24H1 distribution business achieved revenue of 0.67 billion yuan, a year-on-year increase of more than 100%, and the number of dealers increased by 130 in the first half of the year. The company created more than 100 exclusive Japanese sales pallets suitable for offline scenarios. In August, dealer co-creation meetings were held in various regions across the country. The high-end cost performance strategy was verified online and gift boxes. Looking ahead, the offline distribution progress is expected to accelerate. The national snack store achieved revenue of 0.175 billion yuan, corresponding to 209 stores and 116 original stores, and achieved revenue of 0.055 billion yuan. Online and offline channels 24H1 continue to grow at a high level to verify the effectiveness of the high-end cost performance strategy.

Improving supply chain efficiency and boosting profitability. The company's 24Q2 gross margin/net profit margin was 21.9%/-1.3%, +3.24pct/+2.54pct. The company's 24H1 tonnage price was 0.0997 million yuan/ton, down 9% year on year. The company's gross margin maintained upward growth in the face of declining tonnage prices, indicating that under the “one product, one chain” strategy, the efficiency of the company's supply chain has improved significantly, forming a good support for profitability. 24Q2 The company's sales expense ratio/management expense ratio was 21.1%/3.5%, respectively, -0.06pct/-1.73pct. The year-on-year decline in the management expense ratio shows that the “integration of quality and sales” organizational transformation has achieved remarkable results and promoted the improvement of internal organizational management efficiency.

Profit prediction and investment rating: Looking ahead, high-end cost performance strategies drive product competitiveness. The company has brand accumulation and product advantages, and online penetration is expected to continue to increase. In recent years, the offline retail industry has undergone channel transformation driven by changes in the relationship between supply and demand. The company has taken the lead in introducing a high-end cost performance strategy within the industry, grasping the trend of major changes, and putting consumers at the core. The offline distribution space is vast. The company has a brand mentality in the nut category. The cost performance strategy is in line with major changes in channels, and the distribution business is expected to accelerate development and contribute to revenue growth. On the profit side, continuous upgrading of the supply chain and improving organizational efficiency through “integration of product and marketing” are expected to continue to drive profitability improvement. We expect the company's EPS to be 1.00, 1.47, and 1.90 yuan/share in 24-26, maintaining a “buy” rating for the company.

Risk factors: price increases for raw materials such as nuts, increased online competition, offline expansion falls short of expectations, and food safety issues.