occurrences

The company announced its 2024 three-quarter report. In the first three quarters of 2024, the company achieved total revenue of 2.048 billion yuan (-15.20%), net profit due to mother 0.21 billion yuan (-12.80%), and net profit of 0.2 billion yuan (-13.61%) after deducting non-return to mother. With 2024Q3, the company achieved total revenue of 0.467 billion yuan (-15.04%), net profit attributable to mother of -0.023 billion yuan (-0.015 billion yuan in 23Q3), and net profit not attributable to mother of -0.026 billion yuan (-0.016 billion yuan in 23Q3).

Mooncake revenue increased 22% in Q3

1) Mooncake revenue also increased 22% in Q3. In the first three quarters of 2024, the company's revenue for rice dumplings, mooncakes, meals, “egg products, pastries and other” products was 15.15, 0.189, 0.1, 0.192 billion yuan, -19.42%, +21.90%, -11.63%, -11.67%, and 24Q3 revenue was 1.89, 0.189, 0.034, 0.034 billion yuan, and -11.81%, respectively.

2) By channel: In the first three quarters of 2024, the company's revenue from chain stores, e-commerce, supermarkets, dealers, and other channels was 2.64, 6.25, 0.248, 0.743, 0.118 billion yuan, -11.96%, -20.75%, -8.60%, -15.56%, -8.01%, and 24Q3 revenue was 0.69, 2.53, 0.019, 0.074, 0.031 billion yuan, respectively, -16.25%, -25.61%, - 24.90%, +21.98%, +15.43%

3) The decline in Q3 revenue in the East China base market narrowed. In the first three quarters of 2024, the company's revenue in East China, North China, Central China, South China, Southwest China, Northwest China, Northeast China and overseas regions was 10.19, 2.75, 1.16, 0.89, 0.62, 0.015, 0.017, 0.01 billion yuan, -13.04%, -14.75%, +0.16%, -15.49%, -31.61%, -8.47%, +17.88%, -2.24%, 24Q3, -5.17%, -31.88%, +26.74%, -14.59%, -86.54%, -6.78%, +340.77%, -20.43%

Profit margins were stable in the first three quarters

1) Profit margins were stable in the first three quarters. In the first three quarters of 2024, the company's gross margin was 41.16%, +2.59pct year on year, 10.27% year-on-year, and +0.28pct; in terms of cost ratio, sales and management expenses were +1.13 and +0.81 pct year over year to 19.90% and 6.57%, mainly due to declining revenue and more rigid expenses. In absolute terms, sales and management expenses were -10.12% and -3.27% year-on-year.

2) Rates increased during the Q3 off-season. In 24Q3, the company's gross margin was 28.79%, +0.12pct year on year, and the net profit margin to mother was -4.94%, -2.20pct year over year, mainly due to cost rigidity; the company's Q3 rate was +3.65pct to 36.72% year over year.

Investment advice

We expect the company's net profit to be 0.159, 0.174, and 0.181 billion yuan in 2024, 2025, and 2026, respectively, up -4.20%, 9.46%, and 4.38% year-on-year, corresponding to PE 21, 20, and 19 times (market value 3.4 billion yuan) on October 30, respectively, maintaining an “incremental” rating.

Risk warning

Food safety risks, raw material price fluctuation risks, and risk of product expansion falling short of expectations.