Key points of investment
Incident: The company announced the report for the first three quarters of 2024, with total revenue of 4.23 billion yuan/-7.81%; net profit to mother 1.23 billion yuan/-4.7%; 24Q3 total revenue 1.29 billion yuan/-18.8%; net profit to mother 0.199 billion yuan/year over year -47.3%.
Revenue was in line with expectations, and the main business continued to decline. 24Q3 main business revenue 1.28 billion yuan/-19.3% YoY. 1) By product: ① Q3 walnut milk continues the Q2 decline. The decline is expected to be higher than overall revenue. The main reason is 1, the consumption environment is relatively weak, and demand still needs to be repaired; 2. Under weak supply and demand, the company is driving inventory digestion, and sales progress has slowed down. ② Functional drinks increased 25% to 30% year-on-year in 24Q3. Sales performance during the peak season in Q3 was in line with expectations. The company focused on promoting channel expansion and network coverage, and the 30% growth forecast remained unchanged throughout the year. 2) Subregion: The decline in Q3 North China was better than the overall level. The base market in and around Hebei was relatively more resilient to risks due to a solid basic market. In terms of channel expansion, by the end of 24Q3, the number of the company's dealers was 2,512, an increase of 400 or 387 year-on-year.
Gross margin remained stable, and net profit was under phased pressure due to increased investment and investment losses. Q3 net profit margin was 8.4pct year-on-year, mainly due to rising sales rates and investment depreciation. 1) Gross profit margin: -0.2pct to 45.5% year over year in Q3, which remained relatively stable. 2) Expense rate: The 24Q3 sales rate/management rate (including R&D) was 16.3%/3.1%, respectively, +3.3pct/+1.2pct, respectively. The sales expenses increased significantly year-on-year. The main company Q3 signed Xu Xin, world champion of table tennis, as the brand recommender, and increased online and offline publicity during the 2024 Olympics. 3) Investment income: Net loss of 0.09 billion yuan in 24Q3, with investment losses of 0.1 billion yuan in Q3 investment in joint ventures and joint ventures dragged down by China and Hebei investment due to real estate impairment. The year-on-year increase in Q3 loss scale was mainly due to confirmed quarterly differences in pace. The net investment income for the whole year is expected to remain relatively stable year-on-year.
Profit forecast and investment rating: According to the company's latest performance, we slightly lowered the company's net profit to mother in 2024-2026 to 1.44/1.57/1.73 billion yuan (the previous forecast was 1.48/1.6/1.77 billion yuan), -2%/+9%/10%, corresponding to the previous PE 19/18/16 times, maintaining the “gain” rating.
Risk warning: risk of market promotion falling short of expectations, risk of large fluctuations in raw material prices, food safety risks.