Incident: 2024Q1-3 achieved operating revenue/net profit attributable to mothers/net profit after deducting non-return to mother of 3.946/0.576/0.552 billion yuan, respectively (-0.17% YoY /reversal loss/ +19.25%). 2024Q3 achieved operating income/net profit attributable to mother/net profit net profit excluding non-return to mother of 1.328/0.226/0.213 billion yuan, respectively (+2.23%/+32.90%/+27.66% YoY).

Chicken powder achieved relatively rapid growth, and Delicious Fresh's profit growth exceeded expectations. 24Q1-3 Delicious Fresh achieved revenue of 3.808 billion yuan (+0.46%) and net profit to mother of 0.557 billion yuan (+17.40%). 24Q3 Delicious Fresh Soy Sauce/Chicken Powder/Cooking Oil/Other Revenue 7.41/0.181/0.13/0.147 billion yuan (YoY +0.47%/+13.99%/-9.16%/-9.05%). Soy sauce is basically flat, and demand has yet to recover; chicken extract and chicken powder are growing rapidly, and cooking oil/other categories have declined.

The eastern region is growing rapidly, and the number of dealers has increased. The revenue of 24Q3 East/South/Midwest/North was 2.94/0.522/0.237/0.147 billion yuan respectively (+8.57%/+1.20%/-12.94%/+2.53%). The East achieved relatively rapid growth, and the Midwest region experienced a decline. At the end of 24Q3, there was a net year-on-year increase of 285 dealers to 2,395, with a steady increase of dealers; average dealer revenue was -12.05% to 0.501 million yuan/household.

Profitability improved significantly, and expenses decreased year over year. In 24Q3, the company's gross margin/net margin changed by +4.95/+4.90 percentage points year-on-year to 38.82%/18.94%, respectively. The gross margin increased significantly, mainly due to the effects of material purchase unit prices/production costs/logistics costs/product structure optimization. The sales expense ratio, management expense ratio, and financial expense ratio changed year-on-year by -1.86/+1.10/+0.17 percentage points to 6.26%/7.01%/0.04%, respectively.

Investment advice: We believe the company's performance in Q3 improved month-on-month. Looking at the full year, the performance is expected to grow steadily, so we slightly adjusted our profit forecast. We expect 24-26 revenue to be 5.756/6.621/7.635 billion yuan (5.661/6.515/7.517 billion yuan before 24-26), an increase of 12%/15%/15%; the estimated net profit to mother is 0.755/0.915/1.094 billion yuan (24-26 years ago was 0.754/0.931/1.112 billion yuan), same The ratio was -56%/+21%/+20%, and the corresponding PE was 24X/20X/17X, respectively, maintaining the “buy” rating.

Risk warning: macroeconomic downside risks, consumption recovery falling short of expectations, new product promotion falling short of expectations, regional expansion falling short of expectations, channel promotion falling short of expectations, etc.