Key investment points

Event: The company held an offline dealer conference to focus on sharing feedback from the offline distribution business, preparations for the New Year's Festival, and the business conditions of business partners.

The offline distribution data feedback is impressive, and the cost performance strategy continues to be implemented. The distribution business has received good feedback since Q3. Specifically, Q2 sales increased 7% year over year, Q3 increased 51% year over year, and October increased 285% year over year. In terms of style of play, we will continue the cost performance strategy, use online explosions to adapt offline, and roll out the cost performance ratio of competitive products. In addition, it will also cover all categories.

I am full of confidence in preparing for the New Year's goods festival. The company proposed quite a few New Year's Festival goals, and also showcased corresponding major products and promotion methods, including the 9.9 yuan series, nut gifts, baking gifts, etc., and will provide sufficient channel support costs and media promotion expenses.

Business partners share business overviews and are full of strength. 1) Zhen Yang Food: Established in 2014, it is an omni-channel all-category supplier of dairy drinks to launch a series of products in line with Squirrel's cost-effective strategy. 2) Love Discounts: Focusing on community retail in the sinking market, combining software and hardware discounts, the store model has done an excellent job in operating. 3) Love snacks: Using Squirrel's financial strength, product, and brand strength to integrate regional brands.

Profit forecast and investment rating: The design of the company's offline distribution products is attractive, dealers are enthusiastic, the company invests more resources, and is awaiting feedback during the New Year Festival. On the partner side, the quality of each standard is excellent, and it is expected to develop collaboratively with the company. We maintain our previous profit forecast. The company's revenue for 2024-2026 is 10.11/13.3/17.62 billion yuan, up 42%/32% year on year; net profit to mother is 0.41/0.55/0.83 billion yuan, up 86%/34%/53% year on year; corresponding PE is 32/24/15X.

Maintain a “buy” rating.

Risk warning: Food safety risks, fluctuating raw material prices, and increased industry competition.