Qiaqia Foods disclosed the 2024 three-quarter report. 1-3Q24 achieved revenue of 4.76 billion yuan, +6.2% year on year, and realized net profit of 0.63 billion yuan, +23.8% year on year; of these, 3Q24 achieved revenue of 1.86 billion yuan, +3.7% year on year, and realized net profit of 0.29 billion yuan to mother, +21.4% year on year; we expect the company's 24-26 EPS to be 1.93, 2.25, 2.67 yuan, +21.6% year-on-year, + 17.1%, +18.5%, maintaining the buy rating.

Key points to support ratings

3Q24 revenue increased slightly, and the growth rate improved significantly from month to month. 1-3Q24 achieved revenue of 4.76 billion yuan, +6.2% YoY. 1) On a quarterly basis, the company's revenue in Q1/Q2/Q3 2024 was +36.4%/-20.3%/+3.7%, respectively. Affected by holiday delays, the company's shipping pace and revenue recognition rhythm changed significantly compared to last year. In the context of the company taking the initiative to go to the warehouse in the 2nd quarter, we judged that sales improved in July and August, but in September, due to the consumer environment still being repaired, the performance of the nut-based gift scene was weak, slowing down the overall revenue growth rate. 2) By product, we judged that nut gift boxes were weakly affected by the year-on-year decline in gift consumption scenarios. There were many daily sales scenarios for melon seeds, and overall, steady growth was maintained. The revenue performance of other products, such as potato chips and peanuts, was higher than overall.

Cost dividends continue to be paid out, and profit levels continue to rise. 1) On the cost side, benefiting from the decline in the purchase price of sunflower seeds and the scale effect brought about by product volume, the gross margin of the 1-3Q24/3Q24 company was +4.8/+6.3pct to 30.2%/33.1%, respectively; 2) On the cost side, the 3Q24 company's sales/management/financial expenses ratio was -0.5/-0.4/+2.6pct to 7.9%/3.9%/0.8%, respectively. We judge that the company's Q3 sales expenses were slightly reduced due to changes in the main promotion activity method (the impact of promotion activities such as adding volume and no price increase on the report) More reflected in gross margin), the financial expense ratio increased year-on-year due to exchange earnings; 3) On the profit side, benefiting from the increase in product gross margin, the company's profit level continued to rise. 1-3Q24/3Q24 net interest rates to mother were +1.9/+2.3 pct year-on-year, respectively, to 13.2%/15.6%.

The Q4 peak season strives to achieve annual incentive goals, and the foundation for long-term channel and category expansion is solid. 1) In the short term, the company announced the 2024 stock option incentive plan (draft) in September. This time, the equity incentive company set a higher exercise target. If calculated according to the target value, 2H24's revenue and net profit growth rates after deducting non-return mother were 14.7% and 16.9%, respectively. The 2025 Spring Festival is ahead. In the fourth quarter, the company entered the Spring Festival preparation period early and increased cost-effective gift box delivery. We expect that under the impetus of the New Year Festival, the company's overall revenue growth rate will increase sequentially and strive to achieve incentive goals. 2) In the long run, the company's melon seed business has a solid supply chain and channel foundation. It can continue to launch differentiated new products in response to new demand, and continue to lay out sinking markets, emerging channels, and occupy new scenarios. The leading position in the category is stable. The nut business has broad room for development under healthy demand, and is expected to continue to grow at a relatively rapid rate. At the same time, the company actively explores the third growth curve through the horse racing mechanism+category partner model, or contributes additional incremental revenue to the company. We expect that in the future, the company's overall revenue is expected to achieve continuous and steady growth under the two-wheel drive of category expansion+channel expansion.

valuations

We maintain our previous profit forecast. We expect the company's EPS for 24-26 to be 1.93, 2.25, and 2.67 yuan, +21.6%, +17.1%, and +18.5% year-on-year, corresponding to PE 17.2x, 14.7x, and 12.4x in 24-26, maintaining the purchase rating.

The main risks faced by ratings

Prices of raw materials fluctuated, and the expansion of nut categories fell short of expectations.