Key investment points:

Revenue growth accelerated in the third quarter, boosting growth throughout the year. In the third quarter of 2024, the company achieved revenue of 3.738 billion yuan, a year-on-year increase of 27.17%, with year-on-year increases of 25.55 and 15.86 percentage points, respectively. Driven by growth in the third quarter, in the first three quarters of 2024, the company achieved revenue of 10.912 billion yuan, a year-on-year increase of 13.05%, an increase of 5.59 percentage points over the same period last year. Thanks to the expansion of overseas sales channels, the company's revenue is expected to return to a high level of double-digit growth in 2024. Overall, the overseas market contributed to the vast majority of growth. As of the medium term, sales in the overseas market increased by 17.89%, while the domestic market only increased by 0.89%.

Costs are still high, and the decline in raw material prices is lagging behind in the report. In the first three quarters of 2024, costs increased 15.13%, which was higher than revenue growth. In the year when costs generally declined, the company's cost pressure was still relatively high. Since 2024, the prices of molasses and hydrolyzed sugar have slowly declined. According to pan-sugar data, the opening price of molasses for the 24/25 domestic season was 1,250 yuan/ton, lower than 1,400 yuan/ton in November 2024. It is expected that domestic molasses prices will continue to decline in 2025, which will also drive the price of hydrolyzed sugar down. The main decline in costs is expected to be reflected in subsequent financial reports. Due to ongoing cost pressure, the company's product gross margin recorded 23.28% in the current period, down 1.39 percentage points from the previous year.

The year-on-year increase in sales expenses is basically in sync with overseas revenue, indicating that overseas markets are expanding. In the first three quarters of 2024, sales expenses increased by 14.32% year on year, which is in line with the increase in overseas revenue, indicating that overseas markets are expanding and currently require greater market investment.

Investment advice: We forecast that the company's earnings per share for 2024, 2025, and 2026 will be 1.57 yuan, 1.80 yuan, and 2.05 yuan, respectively. Refer to the closing price of 36.29 yuan on December 19. The corresponding price-earnings ratios are 23.14 times, 20.15 times, and 17.70 times, respectively, maintaining the company's holdings increase rating.

Risk warning: risk of exchange rate fluctuations; risk of global inflation; geopolitical risk; domestic raw material prices are rising again.