By-health(300146) 光大证券·2024-10-27 08:42Investment Rating - The report maintains a "Buy" rating for the company, with a current price of 13.47 CNY [4]. Core Insights - The company reported a significant decline in revenue and profit for Q3 2024, with total revenue of 11.2 billion CNY, down 48.8% year-on-year, and a net profit of -0.2 billion CNY, indicating a shift from profit to loss [1][2]. - The company is facing increased competition and slower-than-expected progress in upgrading its core products, leading to greater revenue declines across its brands [1]. - The gross margin has been declining, with Q3 2024 gross margin at 65.31%, down 2.64 percentage points year-on-year, and the overall net profit margin is under pressure due to rising sales and management expenses [2]. Summary by Sections Financial Performance - For the first three quarters of 2024, the company achieved a revenue of 57.3 billion CNY, down 26.3% year-on-year, and a net profit of 8.7 billion CNY, down 54.3% year-on-year [1]. - The main brand "汤臣倍健" generated 31.94 billion CNY in revenue, down 29.20% year-on-year, while the joint care brand "健力多" saw a revenue of 6.98 billion CNY, down 29.9% year-on-year [1]. - The company’s online channel revenue decreased by 23.36% year-on-year, while offline channel revenue fell by 29.08% year-on-year, indicating a broader industry trend of declining sales [1]. Profitability and Cost Structure - The gross margin for the first three quarters of 2024 was 67.93%, with a projected decline for the full year due to expected lower performance in Q4 [2]. - The sales expense ratio increased to 42.33% for the first three quarters, reflecting higher costs associated with maintaining market presence amid declining revenues [2]. - The net profit margin for Q3 2024 was -1.6%, a significant drop of 18.22 percentage points year-on-year, indicating severe profitability challenges [2]. Earnings Forecast and Valuation - The profit forecasts for 2024 to 2026 have been revised downwards to 7.68 billion CNY, 10.60 billion CNY, and 12.44 billion CNY, representing reductions of 38%, 26%, and 21% respectively [2]. - The current price-to-earnings (P/E) ratios are projected at 30x for 2024, 22x for 2025, and 18x for 2026, reflecting the company's position as a leader in the dietary supplement industry despite current challenges [2].