Description of the event

The company's total revenue for 2024Q1-Q3 was 1.364 billion yuan (+2.70%); net profit to mother was 81.5546 million yuan (-13.49%), after deducting non-net profit of 81.4012 million yuan (-1.25%). Among them, total revenue for 2024Q3 was 0.472 billion yuan (-1.17%); net profit to mother was 22.266 million yuan (-42.08%), after deducting non-net profit of 22.6812 million yuan (-23.54%).

Incident comments

Revenue pressure increased in the third quarter, and market demand has yet to be bottomed out. The company's 2024Q1-Q3 revenue growth rates were 8.04%, 1.65%, and -1.17%, respectively. The decline in revenue in the third quarter is expected to be related to the high base of major customers in the same period last year and the current food and beverage consumption environment, which still has significant adverse factors. Since 2024, policy adjustments for major customers have forced suppliers to restructure their profit margins, and the intensification of price war competition in distribution channels has brought greater uncertainty. Looking ahead to the fourth quarter, restaurants have entered the peak consumption season. Recently, various policies to stimulate consumption have also been implemented one after another, and it is expected that there will be a certain improvement. However, considering the company's high revenue base in the fourth quarter of last year, it is expected that there will still be some pressure on revenue growth in the fourth quarter of this year. We look forward to the recovery of the market environment and the promotion of the company's new products next year.

There is still an upward trend in gross margin, and cost investment has increased. The company's 2024Q1-Q3 net interest rate fell 1.12pct to 5.98%, gross margin +1.31pct to 24.25%, and the period expense ratio +1.62pct to 15.71%, including sales expense ratio (+0.72pct), management expense ratio (+1.10pct), R&D expense ratio (+0.20pct), and financial expense ratio (-0.41pct).

The net interest rate due to 2024Q3 fell by 3.33 pct to 4.71%, gross margin +0.04 pct to 22.44%, and the period expense ratio +1.73 pct to 15.36%, including sales expenses ratio (+0.81pct), management expense ratio (+1.19pct), R&D expense ratio (+0.15pct), and financial expenses ratio (-0.41pct). Gross profit margin has maintained a year-on-year upward trend, but the magnitude has slowed sharply, mainly due to changes in the downstream competitive landscape; sales and management expense ratios have increased a lot, which is expected to be mainly related to a decline in revenue scale and an increase in promotion intensity. Furthermore, the net profit pressure returned to the mother is greater than the deduction of non-net profit. This is mainly due to the large amount of government subsidies in the same period last year, and contributions were drastically reduced in the third quarter of this year.

The headquarters base and R&D center construction project has entered trial operation, which will enhance the company's competitiveness. On October 26, the company announced that the “Headquarters Base and R&D Center Construction Project”, an initial public stock offering capital investment project, has basically completed construction work such as site renovation and decoration, equipment purchase and installation, personnel introduction and training, and has recently entered the trial operation stage. The trial operation of the “headquarters base and R&D center construction project” is conducive to improving the company's technical research and development level, optimizing the operating and office conditions of the headquarters, and enhancing the company's technological innovation capabilities and market competitiveness. However, since this project does not directly generate economic benefits, the size of the company's fixed assets will increase after implementation, and the corresponding increase in depreciation expenses will have a certain impact on the company's performance.

Profit forecast and investment advice: The company's net profit for 2024-2026 is expected to be 0.116, 0.126, and 0.145 billion yuan respectively, EPS is 1.17, 1.27, and 1.46 yuan respectively, and the current PE is 27, 25, and 21X, respectively, maintaining a “buy” rating.

Risk warning

1. Competition in the B-side market intensified;

2. Fluctuations in raw material prices;

3. Uncertainty about the development status of the catering industry, etc.