Fuling Zhacai(SZ:002507) KAIYUAN SECURITIES·2024-09-01 06:41Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The company reported a slight decline in revenue and net profit for H1 2024, with revenues of 1.31 billion and net profit of 450 million, representing year-on-year changes of -2.3% and -4.7% respectively. Q2 2024 figures showed revenues of 560 million and net profit of 180 million, with year-on-year declines of -3.4% and -15.6% [3][4] - The report anticipates a gradual improvement in revenue for H2 2024, with a potential turning point in profitability expected in Q3 2024 as cost benefits begin to materialize [6] Summary by Sections Financial Performance - For H1 2024, the company's revenue from various products showed mixed results: pickled vegetables revenue increased by 0.5%, while radish, pickled cabbage, and other products saw declines of -39.4%, -6.2%, and -25.9% respectively. The decline in revenue is attributed to weak terminal demand, particularly in supermarket channels, and internal management adjustments [4] - The company experienced a decrease in profit margins due to rising costs, but a reduction in the prices of raw materials such as pickled vegetables and semi-finished products has started to show cost benefits, with Q2 2024 gross margin improving by 0.38 percentage points to 49.2% [5] Future Outlook - The company is expected to gradually improve its revenue in H2 2024, with significant improvements in gross margins anticipated starting Q3 2024 as cost benefits are fully realized [6] - The profit forecast for 2024-2026 has been slightly adjusted, with expected net profits of 880 million, 960 million, and 1.06 billion respectively, reflecting year-on-year growth rates of +6.2%, +9.7%, and +10.6% [3][7] Valuation Metrics - Current stock price is 11.85 yuan, with a market capitalization of 13.674 billion. The stock is trading at a PE ratio of 16, 14, and 13 for the years 2024, 2025, and 2026 respectively [1][7]