The company released the 2024 three-quarter report:

Q3: Revenue 0.47 billion yuan (-1.2%), net profit attributable to mother 0.02 billion yuan (-42.1%), net profit not attributable to mother 0.02 billion yuan (-23.5%);

Q1-3: Revenue 1.36 billion yuan (+2.7%), net profit attributable to mother 0.08 billion yuan (-13.5%), net profit not attributable to mother 0.08 billion yuan (-1.3%).

Revenue side: Big B adjustments, small B drives

Big B-side: Q3 revenue is expected to drop in units year over year. Affected by customers' own operating pressure, customers focus on single-store profits and supply chain integration, and the pressure is transmitted to upstream supply chain companies.

Small B-side: Q3 revenue is expected to increase slightly year-on-year, due to the company's continuous promotion, increased promotion efforts, and customer marketing promotion. Currently, channel inventory is healthy.

Profit side: New products and increased employee investment

Q3 gross margin was +0.04pct to 22.4% year over year, mainly due to lower prices for some products; sales/management/ R&D rates were +0.8pct/ +1.2pct/ +0.1pct year over year. Expenses increased for new product promotion, personnel remuneration and R&D investment, resulting in Q3 net profit margin of -3.3 pct to 4.7% year over year.

Investment advice: maintain a “buy”

Our point of view:

The company's revenue side was affected by catering demand, but bucked the trend and promoted new channels to guarantee 25-year growth, which is expected to accelerate revenue and increase profits.

Profit forecast: In 2024-2026, the company is expected to achieve total operating income of 19.85/ 2.213/2.445 billion yuan (original forecast 22.21/ 26.43/ 3.025 billion yuan), +4.4%/+10.5% YoY; realized net profit to mother 1.25/ 1.50/ 0.173 billion yuan (original forecast 1.63/ 2.02/ 0.245 billion yuan), -7.3%/+ 20.4%/+15.1%; the current stock price corresponding to PE is 24/20/17 times, respectively, maintaining a “buy” rating.

Risk warning:

Demand falls short of expectations, channel expansion falls short of expectations, and new products fall short of expectations.