Three Squirrels(SZ:300783) Sou Hu Cai Jing·2025-05-13 17:15Core Viewpoint - The company, Three Squirrels, is facing significant challenges despite a return to over 10 billion RMB in revenue, with declining net profits and increasing reliance on price competition, raising concerns about the sustainability of its "high-end cost-performance" strategy [3][4][6][26]. Financial Performance - In Q1 2025, Three Squirrels reported a net profit of 239 million RMB, a year-on-year decline of 22.46%, with a non-recurring net profit drop of 38.31%, indicating a situation of revenue growth without profit increase [3][6]. - For the year 2024, the company achieved a revenue of 10.622 billion RMB, a 49.3% increase year-on-year, and a net profit of 408 million RMB, up 85.51% [4][19]. - The sales expenses for 2024 reached 1.868 billion RMB, a 50.92% increase, significantly outpacing management, financial, and R&D expenses [6][12]. Strategic Challenges - The "high-end cost-performance" strategy is under pressure, as the company heavily relies on online sales, which accounted for 69.73% of total revenue in 2024, leading to high marketing costs that erode net profits [6][9]. - The average selling price of core products has been declining, with price reductions of 9%-16% in key categories, resulting in a continuous drop in gross margin from over 31% in 2021 to below 25% in 2024 [10][11][17]. Market Position and Competition - The snack industry is experiencing intensified competition, with a shift to "stock competition," where traditional marketing strategies are becoming less effective [15][17]. - The company’s offline store count has decreased from 1,043 in 2020 to 333 in 2024, contrasting sharply with competitors like Good Products, which has over 2,700 stores [3][17]. IPO and Future Plans - Three Squirrels aims to achieve a revenue target of 20 billion RMB by 2026, requiring a doubling of revenue in two years, with significant growth needed in offline sales [19][22]. - The company plans to use part of the IPO proceeds to strengthen its offline store network and expand into new product categories, including pet food and ready-to-eat meals [21][23]. Supply Chain and Operational Issues - The company is facing challenges with cash flow, as operating cash flow net amount decreased by 62.96% year-on-year, and inventory surged by 70%, raising concerns about unsold stock [13][24]. - The current production capacity is heavily concentrated in East China, which may lead to supply-demand imbalances as new factories are planned [24].