Fuanna(002327) EBSCN·2024-10-28 04:11Investment Rating - The report maintains a "Buy" rating for the company [6]. Core Views - The company experienced a decline in revenue and net profit in the first three quarters of 2024, with revenue down 2% year-on-year to 1.89 billion yuan and net profit down 15.3% to 290 million yuan [1]. - The company is expected to improve its performance in Q4 due to seasonal demand and consumer promotion policies, despite ongoing uncertainties in demand [4]. - The company has adjusted its profit forecasts for 2024-2026, lowering the expected net profit by 23%, 19%, and 20% respectively [4]. Summary by Sections Financial Performance - In Q3 2024, the company reported revenue of 580 million yuan and a net profit of 75.18 million yuan, with a year-on-year revenue decline of 11.2% and a net profit decline of 40.8% [1]. - The gross margin for the first three quarters of 2024 slightly increased by 0.6 percentage points to 55.2% [3]. - The operating cash flow for the first three quarters was negative 38.16 million yuan, indicating a cash outflow [3]. Channel Distribution - As of June 2024, the company had a total of 1,531 stores, a net increase of 2.5% from the beginning of the year, with franchise and direct stores growing by 2.3% and 2.9% respectively [2]. - The revenue distribution for the first half of 2024 was 24% from direct sales, 25% from franchises, 40% from e-commerce, and 11% from group purchases and other businesses [2]. Cost and Inventory Management - The expense ratio increased by 3.1 percentage points to 36.8% in the first three quarters of 2024, primarily due to higher advertising and store renovation costs [3]. - Inventory as of September 2024 increased by 26.5% from the beginning of the year to 890 million yuan, with inventory turnover days rising by 14 days to 253 days [3].