Event: the company released its three-quarter report in 2023, with operating income of 2.42 billion yuan in the first three quarters, an increase of 6.7% over the same period last year, and a net profit of 240 million yuan, an increase of 5.6% over the same period last year. Among them, 2023Q3 realized operating income of 550 million yuan, an increase of 20.9% over the same period last year, and realized a net profit of-15.06 million yuan.

Steady income growth, food, catering two-wheel drive. 1. In terms of products, the business income of zongzi, moon cakes, meals, egg products and cakes in the first three quarters was 1.88 billion yuan (+ 10.6%), 160 million yuan (- 13.3%), 110 million yuan (+ 2.4%) and 220 million yuan (- 3.9%) respectively. Due to the late Mid-Autumn Festival, the revenue of some mooncake products was deferred to the fourth quarter. Non-dumpling products, continue to increase investment in research and development of baking, quick-frozen, prefabricated vegetables and other products, daily sales products + festival products to promote together. In September 2023, the company adjusted its organizational structure and set up zongzi business department, non-dumpling business department, food sales center, etc., which is more in line with the future development strategy. 2. From the perspective of different channels, the income of chain stores, e-commerce, Shang Chao and distribution in the first three quarters was 300 million yuan (+ 27.5%), 790 million yuan (+ 6.5%), 270 million yuan (- 12.7%) and 880 million yuan (+ 11.6%) respectively. Food, catering two-wheel drive, chain store channel growth is eye-catching.

The net interest rate stabilized. The company's gross profit margin in the first three quarters was 38.6%, down 6.3pp from the same period last year, mainly due to changes in accounting standards, driving the rate of sales expenses down 5.8pp to 18.8% compared with the same period last year. The rate of management expenses was 5.8%, an increase of 0.4pp over the same period last year, mainly due to the increase in fees related to equity incentives. The R & D expenditure rate is 0.8%, which is basically the same. The rate of financial expenses is-0.1%, a decrease of 0.5pp compared with the same period last year. The overall net interest rate was 10%, down 0.1pp from the same period last year.

Equity incentives cover a wide range of areas, buybacks show confidence. 1. The company has completed the restricted stock grant, granting 2 million restricted shares to 80 directors, senior managers, middle managers and core technical (business) backbones, accounting for about 1.99% of the company's total share capital. This equity incentive plan covers a wide range and will establish a long-term incentive mechanism for the company and fully mobilize the enthusiasm of employees, which is conducive to the long-term development of the company. 2. Starting from September 2023, the company will buy back shares with its own funds of 6000-100 million yuan within 12 months, fully demonstrating its confidence in future development.

Profit forecast and investment advice. It is estimated that the net profit of the company from 2023 to 2025 is 220 million yuan, 280 million yuan and 350 million yuan respectively, the EPS is 1.55,1.96,2.44 yuan respectively, and the corresponding dynamic PE is 18 times, 14 times and 11 times respectively, maintaining the "buy" rating.

Risk hint. The risk of food safety, the risk of seasonal fluctuations in the operation of the company, and the risk of the brand being copied.