Description of the event

The company released its 2024 three-quarter report. In the first three quarters, the company achieved revenue of 1.448 billion yuan, an increase of 24.36% year on year; realized net profit to mother 0.067 billion yuan, a decrease of 15.65% year on year; and basic earnings per share was 0.84 yuan.

Incident reviews

Factors such as rising raw material prices and exchange rates put pressure on the company's third-quarter results. Looking at a single quarter, Q3 achieved revenue of 0.506 billion yuan, up 21.03% year on year and 9.58% month on month; realized net profit of 9.6163 million yuan, down 73.96% year on year and 63.19% month on month; basic earnings per share were 0.12 yuan. The sharp year-on-year decline in Q3 net profit was mainly due to a sharp rise in raw materials and international shipping costs for some routes, exchange rate fluctuations caused exchange losses, continued increase in overseas team investment, and share payment fees due to equity incentives.

Continue to explore overseas markets and build a stable global industrial chain production base. The company expanded its experienced overseas professional team, and overseas sales revenue continued to grow. Revenue growth in the third quarter was mainly due to the expansion of overseas markets. In addition, the company continues to promote global production capacity layout, steadily advance project construction progress, build a stable global supply chain production base, enhance customer confidence in supply chain safety, and stabilize the relationship between the company and customers.

The promotion of a maternity support policy system is expected to drive an increase in the number of newborns in the country. Recently, the General Office of the State Council issued “Certain Measures on Accelerating the Improvement of the Maternity Support Policy System and Promoting the Construction of a Fertility-Friendly Society”, which proposes a series of maternity support policies in four areas: strengthening support for maternity services, strengthening the childcare service system, strengthening support measures such as education, housing, and employment, and creating a childbirth-friendly social atmosphere.

Accelerating the improvement of maternity support policies is expected to increase the number of newborns in the country and drive demand for baby diapers.

Investment advice

The company's 2024-2026 EPS is expected to be 0.96\ 1.68\ 2.46, corresponding to the company's closing price of 26.47 yuan on October 30, and the 2024-2026 PE is 27.4\ 15.8\ 10.8, respectively, maintaining the “buy-B” rating.

Risk warning

Risk of project commissioning falling short of expectations; risk of fluctuating raw material prices; risk of overseas market expansion falling short of expectations, etc.