QIANHE(603027) Southwest Securities·2024-09-02 05:56Investment Rating - The report maintains a "Hold" rating for Qianhe Flavor Industry (603027) [1] Core Views - The company reported a revenue of 1.59 billion yuan in the first half of 2024, a year-on-year increase of 3.8%, while the net profit attributable to shareholders was 250 million yuan, a decrease of 2.4% year-on-year. In Q2 2024, revenue was 690 million yuan, down 2.5% year-on-year, and net profit was 96 million yuan, down 14.2% year-on-year [1][2] - The competitive intensity in the zero-additive market has increased, leading to revenue pressure in Q2 due to high base effects from the previous year. The soy sauce segment faced challenges, while other segments maintained stable growth [1][2] - The company is expected to benefit from the ongoing trend towards healthier products, with a focus on expanding its zero-additive product line and enhancing its distribution channels [2] Summary by Sections Financial Performance - In H1 2024, the company achieved a gross margin of 35.6%, down 2.7 percentage points year-on-year. The Q2 gross margin was 35.2%, down 2.3 percentage points year-on-year, primarily due to changes in product mix and increased costs [1] - The sales expense ratio in Q2 2024 was 16%, up 2.5 percentage points year-on-year, reflecting increased marketing expenditures. The management expense ratio decreased by 0.8 percentage points to 3.4% [1] Product and Channel Strategy - The company plans to continue enriching its zero-additive product line and actively expand categories such as vinegar and cooking wine, with a focus on increasing the proportion of high-margin products [2] - The company is enhancing its distribution network and channel penetration, particularly in underdeveloped markets, which is expected to accelerate growth [2] Earnings Forecast - The earnings per share (EPS) for 2024-2026 are projected to be 0.56 yuan, 0.66 yuan, and 0.76 yuan, respectively, with corresponding dynamic price-to-earnings (PE) ratios of 24x, 20x, and 18x [2]