Incident: Xiang Piaopiao released its report for the third quarter of 2024. The company achieved operating income of 1.938 billion yuan in the first three quarters of 24, -2.05% year-on-year, and achieved net profit attributable to shareholders of the parent company of 0.018 billion yuan, +408.98% year-on-year, and realized net profit without deduction of -0.006 billion yuan. According to the three-quarter report, the company achieved revenue of 0.759 billion yuan in a single quarter of 24Q3, -6.1% year on year, net profit to mother 0.047 billion yuan, -0.62% year on year, and net profit without return to mother of 0.037 billion yuan, or -6.52% year over year.

The ready-to-drink business was adjusted, and the brewing business was under pressure 1) In the first three quarters of 24, the company achieved brewed beverage revenue of 1.11 billion yuan, -8.27% compared to the same period last year, accounting for 58.07%; the company's ready-to-drink product positioning was reorganized, and ready-to-drink products grew relatively well, achieving revenue of 0.801 billion yuan for ready-to-drink products, an increase of 7.89% over the same period last year, accounting for an increase of 3.89pct to 41.93% over the same period last year. Looking at the 24Q3 single quarter, the company achieved revenue of 0.496 billion yuan from brewed products, or -14.88%, accounting for 66.11%; achieved revenue from ready-to-drink products of 0.254 billion yuan, an increase of 17.82% over the same period last year, accounting for an increase of 6.86 pct to 33.89% over the same period last year.

2) In the first three quarters, the company achieved revenue of 8/2.5/2.85/1.54/0.89/1.14/0.34/0.119/0.015/0.051 billion yuan in revenue in East China/Southwest/North China/Northeast/Northeast/North China/Northeast China/respectively, compared to the same period

+4.42%/-6.11%/-8.38%/-4.46%/-1.15%/+8.83%/-30.77%/+6.48%/+14.58%. Looking at a single quarter, 24Q3 companies achieved revenue in East China, Southwest China, North China, North China, Northeast China, e-commerce, export, and direct management respectively

3.63/0.83/1.11/0.58/0.35/0.46/0.13/0.025/0.005/0.011 billion yuan, +4.14%/-12.38%/-5.16%/-17.74%/-8.36%/-15.55%/+27.80%/-46.44%/-8.21%/-14.77%, respectively.

Gross margin increased significantly, driving the company's overall profit level to grow in an orderly manner in the first three quarters of 2024. The four models accounted for 90.36%/6.21%/0.78%/2.65% of the main business in the company's channel structure. Compared with the same period last year, +2.12/-2.57/+0.06/+0.39pct, respectively, achieved revenue of 17.27/0.119/0.015/0.051 billion yuan, respectively, +0.23%/-30.77%/+6.48% over the same period last year /+14.58% Looking at a single quarter, 24Q3 companies' distributors/e-commerce, export/direct management achieved revenue of 7.1/0.025/0.005/0.011 billion yuan respectively, or -3.37%/-46.44%/-8.21%/-14.77% year-on-year, respectively.

Looking at 24Q3, the company's gross margin was 40.94%. Compared with +2.41pct for the same period last year, management/sales/R&D/finance expense ratios compared +1.03/+0.23pct to 8.06%/26.13%/1.58%/-1.23% for the same period last year, respectively, and the net margin compared to +0.34pct to 6.22% for the same period last year.

Profit forecasting and investment advice

Considering certain challenges and uncertainties in the external macro environment, we lowered the company's 24-26 profit forecast. The company's net profit for 24-26 is 0.281/0.364/0.449 billion yuan (the original value was 0.298/0.383/0.469 billion yuan), and the corresponding PE is 20/15/12 times, respectively. Considering that the company's subsequent ready-to-drink business is still growing, we maintain a “buy” rating.

Risk warning

Risk of rising raw material costs, risk of poor promotion of new products, food safety issues, etc.