Key investment points

2024Q3's performance was under pressure, and both revenue and profit declined. Due to the effects of the company's business adjustment period and weak demand, the brewing business declined slightly in 24Q3, and the ready-to-drink business continued to grow. We look forward to the company's subsequent improvements and the recovery of the brewing business due to the arrival of the peak season.

24Q3 revenue declined slightly, and performance was in line with expectations

Revenue of 1.938 billion yuan was achieved in the first three quarters of 2024, down 2.05% year on year; net profit to mother was 0.018 billion yuan, up 408.98% year on year.

2024Q3 achieved revenue of 0.759 billion yuan, a year-on-year decrease of 6.10%; realized net profit to mother of 0.047 billion yuan, a year-on-year decrease of 0.62%; realized deduction of non-net profit of 0.037 billion yuan, a year-on-year decrease of 6.52%.

Looking at the breakdown, the company's brewing business achieved revenue of 1.11 billion yuan in the first three quarters, down 8.27% year on year; ready-to-drink products achieved 0.801 billion yuan, up 7.89% year on year; 24Q3 brewing business achieved revenue of 0.496 billion yuan, down 14.88% year on year; and the ready drink business achieved 0.254 billion yuan, up 17.82% year on year.

Gross margin increased slightly, and net margin increased

The 24Q1-Q3 company's gross margin was 34.64%, +2.40pct year on year; 24Q3 achieved a gross profit margin of 40.94%, +2.41pct year on year.

The fee rate has remained relatively stable. 24Q1-Q3 achieved sales/management/R&D/finance cost rates of 27.55%/8.81%/1.58%/-2.71%, year-on-year, -1.48/+0.54/+0.37/ -0.09pct; 24Q3 sales/management/R&D/finance expenses ratio was 26.13%/8.06%/1.58%/-1.23%, compared to +0.23/+1.03/+0.52/+0.76pct.

There was an increase in net interest rates. The 24Q1-Q3 company's net interest rate was 0.90%, +0.74pct year on year; 24Q3 achieved a net profit margin of 6.22%, +0.34pct year on year.

The previous profit forecast was slightly adjusted to maintain the buying rating

Considering that terminal demand is still being repaired and the company's business strategy adjustments will take a certain period of time, we lowered our previous performance expectations for the release of new brewed and ready-to-drink products and adjusted our previous profit forecast. We expect to achieve revenue of 3.876 billion yuan, 4.302 billion yuan, and 4.846 billion yuan in 2024-2026, with year-on-year increases of 6.93%, 10.99%, and 12.63%, respectively; achieving net profit of 0.317 billion yuan and 0.379 billion yuan. 0.447 billion yuan, year-on-year growth of 13.13%, 19.43%, and 17.94%, respectively. EPS is expected to be 0.77, 0.92, and 1.09 yuan respectively in 2024-2026, and the corresponding PE is 18.46, 15.46, and 13.10 times, respectively.

Risk warning: Channel expansion falls short of expectations, fluctuating raw material costs, food safety and other risks.