The company released its 2024 three-quarter report. In 24Q3, the company achieved revenue of 4.02 billion yuan/ -13.0%, net profit due to mother 0.21 billion/ -12.4%, net profit after deducting non-attributable net profit 0.2 billion/ -9.1%, and achieved investment income of 0.15 billion yuan/ +95.8%. After deducting investment income, the main retail business's net profit was 0.064 billion/ -56%. In the first three quarters of 2024, revenue was 13 billion/ -12.0%, net profit attributable to mother was 0.92 billion/ -19.2%, and net profit not attributable to mother was 0.9 billion/ -12.1%. As a regional retail leader, the company continues to promote store optimization and actively explore business format innovation; soon, consumer finance can also contribute considerable investment returns. At the same time, the company continues to promote supply chain transformation to achieve systematic cost reduction and efficiency, and is expected to further stimulate operating vitality after the implementation of mixed reforms. Maintain a “Highly Recommended” rating.

Investment returns are growing at a high rate, and the main retail business is under pressure. In 24Q3, the company achieved revenue of 4.02 billion yuan/ -13.0%, net profit of 0.21 billion/ -12.4%, net profit after deducting non-return of 0.2 billion/ -9.1%, and realized investment income of 0.15 billion yuan/ +95.8%. After deducting investment income, net profit from the main retail business was 0.064 billion/ -56.4%.

The first three quarters of 2024 achieved revenue of 13 billions/ -12.0%, net profit due to mother 0.92 billion/ -19.2%, net profit of 0.9 billion/ -12.1%, and investment income of 0.48 billion/ -2.9%. The company's main business operations are under pressure due to consumption and the impact of historically recorded continuous high temperatures and phased electricity restrictions in the Chongqing region.

Sales declined in department stores and auto trade. By 2024Q3, the number of the company's offline retail stores decreased by 8 to 273 compared to the beginning of the year. Among them, department stores/supermarkets/electrical/auto trade had a net increase of +0/-3/+1/-6 stores, respectively. The number of stores at the end of the period was 50/149/42/32, respectively. By business type, the sales volume of 24Q1-Q3's department store/supermarket/electrical/auto trade business in Chongqing was 16.3/5.29/2.42/3.28 billion, respectively, with year-on-year changes of -8.2%/-2.1%/+1.9%/-30.3%, respectively. Among them, sales in department stores and auto trade declined significantly.

Q3 Gross margin declined, and expense ratios increased. The 24Q3 company's gross profit margin was 24.36%/-0.85pct, the net sales margin was 5.16% /+0.28pct, and the company's sales/management/R&D/finance expenses ratio was 15.24%/5.02%/0.08%/0.34%, respectively, +0.98/ +0.58/ -0.06/ -0.21pct.

Investment advice. As a regional retail leader, the company continues to promote store optimization and actively explore business format innovation; soon, consumer finance can also contribute considerable investment returns. At the same time, the company continues to promote supply chain transformation to achieve systematic cost reduction and efficiency, and is expected to further stimulate operating vitality after the implementation of mixed reforms. The company's net profit for 2024/2025/2026 is expected to be 1.25/1.33/1.43 billion, respectively, maintaining the “Highly Recommended” rating.

Risk warning: Consumer demand falls short of expectations, the immediate development of the consumer business falls short of expectations, and industry competition intensifies.