Incident: 2024H1 achieved operating revenue/net profit attributable to mother/net profit net profit after deduction of 1.273/0.108/0.099 billion yuan, respectively (YoY +12.89%/-34.60%/-10.87%). 2024Q2 achieved operating income/net profit attributable to mother/net profit net profit excluding non-attributable net profit of 0.649/0.048/0.047 billion yuan, respectively (YoY +10.29%/-46.75%/-14.79%). The company plans to distribute a cash dividend of 1.5 yuan for every 10 shares, for a total of 60.0015 million yuan (accounting for 55.30% of 24H1's net profit to mother).

B+C resonance, with healthy growth in all three categories. 24Q2's revenue from compound seasonings/light cooking solutions/beverage and dessert ingredients was 0.301/0.291/0.04 billion yuan (+10.10%/+11.79%/+3.04%), and all three categories achieved positive growth. The basic market market on the B-side market was stable, and demand from catering customers increased significantly; the share of empty pasta on the C-side continued to lead, and a series of new products under the same name brewed pasta/Disney emerged; the number of new product developments also increased by more than 11%, and the contribution rate further increased.

East China is growing steadily, and the number of dealers is growing rapidly. 24Q2's revenue in East China/South China/North China/Central China/Northeast China/Southwest/Northwest/Northwest/Overseas was 5.13/0.25/0.44/0.17/0.16/0.008/0.004/0.005 billion yuan (YoY +16.57%/-14.11%/-25.23%/+1.40%/+3.60%/+46.28%/+76.84%/+9.36%). East China grew steadily, and Southwest/Northwest China achieved high growth rates. 24Q2 direct/non-direct sales revenue was 0.521/0.11 billion yuan, respectively (+11.31%/+6.20% YoY). At the end of 24Q2, the number of dealers changed +126 to 445, and the average dealer revenue changed -23.87% year over year to 0.2483 million yuan/household, mainly due to the rapid increase in the number of dealers.

Profit margins are under pressure, and refined operation reduces costs. In 24Q2, the company's gross margin/net margin changed by -2.38/ -6.73 percentage points to 32.10%/8.66%, respectively. The decline in net interest rate was mainly due to a decrease in other income & asset disposal income and an increase in asset impairment losses. The sales expense ratio, management expense ratio, and financial expense ratio changed by +0.25/ -1.38/+0.06 percentage points year-on-year, respectively; Q2 companies' management expense ratio declined a lot, mainly due to the optimization of the company's organizational form, which improved the operational quality of the organization through fine management.

Investment advice: We believe that the remodulation benefits from B-side recovery and the acceleration in the pace of new product launches, and is expected to continue to grow; the light cooking business is also expected to continue to grow. According to the interim report, we believe that the consumption scenario is still under pressure. At the same time, other income and asset disposal revenue in '23 caused a high profit base. We lowered our profit forecast and estimated 24-26 revenue to be 2.674/3.009/3.365 billion yuan (previous value was 2.743/3.127/3.524 billion yuan), an increase of 13%/13%/12%; net profit due to mother was 0.231/0.268/0.305 billion yuan (previous value was 0.287/0.339/ 0.396 billion yuan), -23%/+16%/+14% year-on-year, corresponding PE was 19X/17X/15X, respectively. We believe that the decline in the company's profit was mainly due to a high base of other income and asset disposal income in '23. 24H1 deducted non-net profit, which is expected to be maintained throughout the year, so it maintains a “buy” investment rating.

Risk warning: Industry competition intensifies; consumer demand falls short of expectations; risk of raw material price fluctuations; market expansion falls short of expectations; risk of new product promotion falling short of expectations.