JACK(SH:603337) HTSC·2024-10-11 13:03Investment Rating - The investment rating for the company is "Buy" with a target price of RMB 39.80, up from the previous target of RMB 38.20 [1]. Core Views - The company is expected to achieve a net profit attributable to shareholders of RMB 600 to 630 million for the first three quarters, representing a year-on-year increase of 45% to 53%. The net profit for Q3 alone is projected to be between RMB 183 to 213 million, a year-on-year increase of 29% to 50% [1][2]. - The company has slightly raised its profit forecast for 2024, with expected net profits of RMB 800 million, RMB 1.16 billion, and RMB 1.28 billion for 2024, 2025, and 2026 respectively, reflecting a 4%, 0%, and -1% adjustment from previous estimates [1][3]. Summary by Sections Q3 Performance - The company reported strong performance in Q3, with a projected net profit of RMB 1.98 billion, a 39% year-on-year increase. The overall growth is attributed to an increase in market share and effective product upgrades and SKU rationalization strategies [1][2][3]. Profitability - The company achieved a gross margin of 31.8% and a net margin of 13.0% in the first half of the year, reflecting year-on-year increases of 3.4 percentage points and 2.8 percentage points respectively. This improvement is primarily due to product structure upgrades and cost reductions from SKU simplification [3][4]. Market Trends - The sewing machine export market is expected to continue its recovery, with a projected increase in exports in Q4. The company has initiated a "trade-in" program to stimulate domestic demand for product upgrades [4][5]. Financial Projections - The company’s revenue is projected to grow significantly, with expected revenues of RMB 6.617 billion, RMB 8.828 billion, and RMB 9.351 billion for 2024, 2025, and 2026 respectively, indicating a compound annual growth rate (CAGR) of 33% from 2023 to 2026 [5][10]. Valuation Metrics - The company is currently trading at a PE ratio of 16 for 2024, compared to an average of 22 for comparable companies, suggesting a favorable valuation relative to peers [1][8].