Juewei Food (SH:603517) Guotai Junan Securities·2024-09-02 15:38Investment Rating - The report maintains an "Accumulate" rating for the company [2][4]. Core Views - The company's performance met expectations, with an interim dividend exceeding forecasts. It is anticipated that the company will maintain high dividends throughout 2024 while also conducting share buybacks [2][3]. - Due to pressures on individual store performance and adjustments in store closure assumptions, the earnings forecasts for 2024 and 2025 have been revised down to CNY 0.93 and CNY 1.00 per share, respectively, from previous estimates of CNY 1.59 and CNY 2.04. The 2026 EPS forecast is set at CNY 1.11 [3]. - The target price has been adjusted to CNY 15.81 from CNY 51.49, reflecting a 2024 PE of 17X, with the current stock price corresponding to a 2024 dividend yield of 6.5% [3]. Summary by Sections Financial Performance - For 1H24, the company reported revenue of CNY 3.34 billion, a year-on-year decrease of 9.73%. The non-GAAP net profit was CNY 281 million, an increase of 24.15% year-on-year. In 2Q24, revenue was CNY 1.644 billion, down 12.35% year-on-year, while non-GAAP net profit rose by 36.63% to CNY 125 million [3]. - The company declared a cash dividend of CNY 3 per 10 shares for the interim period, which was above expectations [3]. Store Operations - As of June 30, the total number of stores in mainland China was 14,969, with a net reduction of 1,193 stores in the first half of the year, representing a year-on-year decline of 7.38%. The decline in customer traffic led to a 2.55% drop in same-store sales, although the rate of decline has narrowed compared to previous periods [3]. - The company is transitioning from a primarily offline model to a balanced online and offline approach, with a focus on profitability as a key performance metric for stores [3]. Cost and Margin Analysis - The gross margin improved significantly in 2Q24, reaching 30.55%, an increase of 8.21% year-on-year, attributed to a downward trend in raw material costs, particularly for duck by-products [3]. - The selling expense ratio was 14.18%, up 6.79% year-on-year, mainly due to increased advertising expenditures. The management expense ratio was 10.88%, reflecting a year-on-year increase of 4.1% [3].