The company's 24Q2 snack sales revenue was about 5.98 billions/ +330%. Excluding stock payments, the net profit of mass-selling snacks was 0.16 billion/ loss of 0.03 billion in the same period last year. The net interest rate was 2.7% /-2.2% in the same period last year, and continued to increase by about 0.2 pct compared to 2.5% in 24Q1. The mass sale of snacks is currently growing rapidly, and the industry share is rapidly concentrated at the top; the company is leading in multiple dimensions such as team, supply chain, warehousing, and expansion, and its leading position is stable. It is expected that its share will continue to increase, profits will gradually be realized, and minority shares have taken back one after another to continue to increase profits and maintain a “highly recommended” rating.

Revenue increased, and net interest rates increased month-on-month. The company released its 2024 interim report. The company's 24H1 revenue was 10.92 billions/ +392%, net profit 0.14 billion/ +348%, and net profit to mother was 0.93 million/ loss of 5.79 million for the same period last year.

Separated, 24Q2 revenue was 6.08 billions/ +318%, of which revenue from mass sales of snacks was 5.98 billion/ +330% month-on-month, revenue from edible fungi 0.11 billion/ +64%; Q2 net profit was 0.075 billion/ loss for the same period last year 0.1 billion; net profit to mother was -0.01 billion/ -0.06 billion for the same period last year. The profit of Q2 mass-selling snacks was impressive, mainly due to loss of edible fungi; after stock payments were added back, the net profit of mass-selling snacks was 0.16 billion/ loss of 30 million/month-on-month +38.8% in the same period last year, and the net interest rate was 2.7% /year over year +5.0 pct month-on-month +0.2 pctQ2 rapidly expanded stores, and single-store revenue increased year-on-year. At the end of 24H1, the number of the company's stores was 6,638, a net increase of 1912 in 24H1. Of these, 2105/closed, and 81 were reduced. The closing rate was only 1.7%. By region, at the end of 24H1, the number of the company's stores in East China/Central China/North China/Northwest/Southwest/South China/South China/Northeast China was 4093/894/658/184/346/185/278, respectively, a net increase of 848/195/250/111/156/119/233; revenue was 69.5/13.8/10.6/1.8/0.54/0.21/0.35 billion, respectively, up 388%/197% /27X/274X/28X/75X; 24Q2 forecast The company's net opening of about 1500+ stores, and the average monthly revenue of a single store is estimated to be about 0.34 million/ year over year+ low single digits/month-on-month + medium to high single digit, and the performance of individual stores continues to improve.

The gross margin increased markedly from month to month, and the overall cost ratio was stable. The gross margin of the 24Q2 company was 11.1% /y-o-y +5.4pct/month-on-month +1.3pct, of which the gross margin for mass-sold snacks was 10.9% /+3.0pct; the 24Q2 sales expense ratio was 4.9% /y-0.5pct/month-on-month +0.8pct, and the management expense ratio was 3.4% /y-y -3.0pct/month-on-month +0.4pct. The gross margin continued to rise as the scale grew and the bargaining power increased. All expenses were well controlled.

Investment advice. The mass snack industry continues to grow rapidly, and the industry share is rapidly concentrated; the company's leading position in mass snack sales is stable, the team is high-quality, leading in multiple dimensions such as supply chain, warehousing, expansion, and brand. On the basis of the current high market share, it is expected that its share will continue to increase in the future, and profitability is highly flexible under a strong industrial chain position. Currently, the company's progress in recovering minority shares has exceeded expectations, and will also significantly increase profits to mother and continue to open up market capitalization space. The company's 2024E/25E/26E net profit to mother is estimated to be 0.2/0.47/0.61 billion, respectively, maintaining the “Highly Recommended” rating.

Risk warning: Store opening falls short of expectations, same-store growth falls short of expectations, industry competition intensifies