Incident: The company released its 2024 three-quarter report. In 2024Q1-Q3, the company achieved total operating income of 1.364 billion yuan, +2.70% year over year; realized net profit attributable to mother 0.082 billion yuan, -13.49% year over year; realized net profit without deduction of 0.081 billion yuan, or -1.25% year on year. Looking at a single quarter, the company achieved total operating income of 0.472 billion yuan, -1.17%; realized net profit to mother of 0.022 billion yuan, or -42.08% of the same period; and realized net profit after deduction of 0.023 billion yuan, or -23.54% year-on-year.

Big B customers are still under pressure, and the small B side is recovering steadily. The company achieved total operating income of 0.472 billion yuan in 24Q3, -1.17% year-on-year; realized net profit to mother of 0.022 billion yuan, or -42.08% year-on-year. We judge that the main B customers themselves are facing store expansion and increased competition in the industry, and the Q3 single-digit decline is expected; thanks to the company's continuous development and empowerment of distribution customers, the small B side is expected to increase slightly year-on-year in Q3.

Q3 The gross margin remained stable, and increased investment to empower distribution customers. The company's 24Q1-Q3 gross profit margin was 24.25%, year-on-year +1.31pct; net profit margin to mother was 5.98%, -1.12pct; of these, single 24Q3 gross profit margin was 22.44%, +0.04pct year on year; net profit margin to mother 4.71%, year-on-year. The company's expense ratio for the 24Q1-Q3 period was 15.71%, +1.62pct year on year, and the sales/management/R&D/finance expenses ratio was 5.31%/9.33%/1.21%/-0.13%, respectively, +0.72/+1.1/+0.2/-0.41pct. The cost rate for a single Q3 period was 15.36%, +1.73pct year over month, -1.34pct month-on-month, sales/management/R&D/finance expense ratios were 4.89%, 9.26%, 1.28%, and -0.07%, respectively, +0.81/+1.19/+0.15/-0.41pct, and -0.23/-1.21/-0.01/0.12pct month-on-month, respectively.

Profit forecast: Deeply cultivate the catering supply chain and actively promote new and embrace change. Use our scale advantage to advance cost advantages from the purchasing side to the production side to collaborate with customers to compete in the market. Relying on strong product research and development capabilities, we continuously launch new products to meet the current consumption environment and consumer needs to help customers expand new channels, and it is expected to contribute positively in the future. We expect the company to achieve operating income of 2.079/2.387/2.849 billion yuan in 24-26, achieve net profit of 0.14/0.162/0.196 billion yuan, PE 21.56/18.59/15.38x, respectively, giving it a “recommended” rating.

Risk warning: macroeconomic downside risk, industry demand falling short of expectations, rising costs exceeding expectations