Incident: The company disclosed its results for the third quarter of 2024: in Q1-3, the company achieved revenue of 0.297 billion yuan, +11.78% year over year; net profit to mother 0.054 billion yuan, +30.88% year over year; net profit after deducting non-return to mother 0.052 billion yuan, +35.38% year over year. Among them, in Q3, the company achieved revenue of 0.11 billion yuan, +6.45% year over year; net profit to mother 0.026 billion yuan, +44.52% year over year; net profit after deducting non-return to mother 0.025 billion yuan, +49.39% year over year. The company's Q3 performance growth exceeded expectations.

The Q3 catering channel continued its rapid growth trend, and food processing faced adjustments by channel. Q3 companies' revenue from the catering, food processing, brand customization, direct supermarkets, direct e-commerce, and dealer (retail) channels was compared year-on-year

+20.83%/-9.06%/+18.91%/-12.55%/+76.24%; Among them, the overall catering channel continued the rapid growth trend in the first half of the year, which is mainly due to the company continuing to develop new clients and maintain innovation drive on the product side; during the Q3 period, the number of the company's dealers decreased by 20 compared to the end of Q2, and currently 71. By product, revenue from Q3 sauce seasonings, powder seasonings, and food additives was +15.81%/-17.15%/-28.22%, respectively. By region, Q3 sales in East China, North China, Northeast China, Central China, South China, and other regions were year-on-year

+4.79%/+16.89%/-33.42%/-22.68%/+123.79%/-18.72%.

There was an improvement in Q3 gross margin, and the return of equity payments significantly increased the net profit margin to mother. The company's Q3 gross margin was 39.04%, +0.61 pct year over year, while the gross sales margin for the same period was 31.94%, -0.52 pct year on year. On the cost side, the total cost rates for the four Q3 items were -7.25pct year over year; among them, the sales/management/R&D/finance rates were +1.13/ -7.95/-0.28/ -0.15pct, respectively; among them, the company's management rate improved significantly, mainly due to the impact of the stock payment fees calculated by the termination of the stock option incentive plan in the current period. Finally, due to the significant improvement in the expense ratio, the Q3 company's net return interest rate was 23.41%, +6.17pct year on year, and 22.80% net profit margin without return to mother was 22.80%, +6.55pct year on year.

The first three quarters ended smoothly. Under peak season catalysis, sales in the main business are expected to pick up. Despite the weakness in the food and beverage consumption environment, the company's business side ended smoothly in the first three quarters. In particular, under the continuous impetus of the catering channel, the company's main business sales achieved double-digit growth. With the arrival of the peak Q4 consumption season, Superposition Company adheres to an innovation-driven growth model and continues to expand products and expand customers. The company's core channel is expected to pick up sales during the period when marginal demand for condiments is being repaired.

Profit forecast and investment advice: Since the company's Q3 profit exceeded expectations, the company's net profit to mother for 2024-26 was raised to 0.073/0.088/0.105 billion yuan (previous value was 0.69/0.84/1.02), respectively, to +30%/+20%/+20% compared to the same period last year. Considering the continuous penetration of the polymodulation category on the B-side and the company's strong R&D and innovation capabilities, it is expected that the company's performance is expected to maintain a steady and rapid increase, so it maintains a “buy” rating.

Risk warning

Sales of large single products fell short of expectations, raw material prices fluctuated, online channel growth fell short of expectations, food safety, B-side demand fell short of expectations