Incident: The three squirrels announced a profit distribution plan before the Spring Festival. They plan to distribute a cash dividend of 1.25 yuan for every 10 shares to all shareholders, totaling 50.0912 million yuan in the proposed cash dividend, accounting for 14.68% of net profit returned to mother for the first three quarters of 2024. At the stage of rapid development, the company actively shares high-quality development results with investors based on confidence in future sustainable development.

Expand external channels, build an internal supply chain, and make the core more stable. Since the transformation to “high-end cost performance”, the three squirrels have continued to achieve breakthroughs in performance. Douyin's rapid expansion in 2024 successfully led to a high overall revenue increase. The company's revenue in the first three quarters was +56.46% year-on-year to 7.169 billion. Currently, the company is focusing on offline distribution, providing strong channel support, and summarizing explosives to create an experienced product system, which is expected to drive the distribution operation model to run and open up offline market space. At the back end, the company has achieved direct global procurement of core raw materials and is actively building a supply chain. Currently, it has built a nationwide nut factory layout, shortened the nut distribution chain, and 7 major snack factories have also been built as scheduled. In the future, it is expected that through the construction of its own production line, it will enable the manufacture of large terminal products and achieve profit release.

Acquire emerging business formats and participate in channel transformation. On October 28, the company signed an “Investment Intent Agreement” to acquire control or related business and assets of iSnack, Ai Discount, and Zhi Yang Food, and enter into retail transformation. Currently, Ai Snacks already has nearly 2,000 mass snack stores. Ai Discount has created a multi-category discount supermarket business. With the support and empowerment of Squirrels, it is expected that the business model will be further optimized and entered a stage of accelerated development.

Short-term catalysis is clear, and there is plenty of long-term space. In the short term, the company is actively preparing for the New Year's goods festival. Currently, it has begun offline stocking, and distribution is anchored to the 0.8 billion incremental target for the New Year's goods festival. It is expected that it will enter the peak online New Year sales season one after another, which is expected to form a short-term catalyst. In the long run, the company reshapes offline distribution pallets with “high-end cost performance” and actively develops channels. Distribution is expected to support the achievement of long-term goals. At the same time, the company is participating in the transformation of the retail industry and has sufficient potential for long-term development. On the profit side, it is expected that net interest rates will increase through supply chain layout, off-season daily sales, and an increase in the share of snacks.

Profit forecast: The company has both short-term growth catalysts and long-term development potential, and there is plenty of long-term space. The company's 2024-2026 revenue is expected to be +45.2%/+30.0%/+20.6% to 10.33/13.43/16.19 billion yuan, respectively, and net profit to mother +89.3%/+37.1%/+25.8% YoY to 0.42/0.57/0.72 billion yuan, respectively, giving a “buy” rating.

Risk warning: Increased market competition, falling short of expectations in business development, food safety issues.