Sichuan Teway Food (SH:603317) ZHONGTAI SECURITIES·2024-09-05 03:09Investment Rating - The investment rating for the company is "Buy" (maintained) with a market price of 9.21 [1]. Core Insights - The company has experienced overall revenue pressure, but its gross profit margin continues to improve. The revenue for the first half of 2024 was 1.468 billion yuan, representing a year-on-year growth of 14.68%, while the net profit attributable to the parent company was 247 million yuan, up 18.79% year-on-year [1][3]. - The company has seen a significant increase in online sales, while its hot pot base material segment has faced notable pressure. The revenue from hot pot seasoning, Chinese cuisine seasoning, and other condiments showed a decline of 22.94%, 4.75%, and 0.63% respectively [1][3]. - The company has effectively controlled its expense ratios, leading to a continuous improvement in gross profit margins, which increased by 3 percentage points to 10.70% [1][3]. Financial Forecasts and Valuation - The company's revenue is projected to grow from 3,149 million yuan in 2023 to 4,450 million yuan by 2026, with a compound annual growth rate (CAGR) of approximately 13% [1][2]. - Net profit is expected to rise from 457 million yuan in 2023 to 722 million yuan in 2026, reflecting a CAGR of around 16% [1][2]. - Earnings per share (EPS) are forecasted to increase from 0.43 yuan in 2023 to 0.68 yuan in 2026 [1][2]. - The price-to-earnings (P/E) ratio is projected to decrease from 21.5 in 2023 to 13.6 in 2026, indicating a more attractive valuation over time [1][2]. Operational Performance - The company has reported a decrease in the number of distributors, with a net reduction of 15 distributors in the second quarter of 2024 [1]. - The company’s sales and management expense ratios have been effectively managed, contributing to improved profitability [1][3]. - The company’s cash flow from operating activities is expected to improve, with projections of 552 million yuan in 2024 and 782 million yuan in 2026 [2].