Shede Spirits (SH:600702) Guotai Junan Securities·2024-10-29 01:23Investment Rating - The report maintains a "Buy" rating for the company and raises the target price to 79.07 CNY from the previous 68.02 CNY [3][5][12] Core Views - The company's performance in Q3 2024 was below expectations, primarily due to the white liquor industry's transition into a destocking phase, indicating a continuation of the adjustment period [2][12] - Despite the current adjustment, the report suggests that the company's earnings recovery is likely as the economic cycle improves, given that white liquor is a cyclical consumer product [2][12] Financial Summary - For 2024, the company is expected to generate revenues of 5,763 million CNY, a decrease of 18.6% compared to the previous year, with net profit projected at 979 million CNY, down 44.7% [4][12] - The earnings per share (EPS) estimates for 2024, 2025, and 2026 are adjusted to 2.94 CNY, 3.13 CNY, and 3.44 CNY respectively, down from previous estimates of 3.78 CNY, 4.17 CNY, and 4.56 CNY [3][12] - The company's net profit margin for Q3 2024 fell to 6.56%, a decline of 15.31 percentage points year-on-year, reflecting increased expenses during the destocking phase [4][12][13] Market Performance - The company's stock price has fluctuated between 40.18 CNY and 116.24 CNY over the past 52 weeks, with a current price of 68.16 CNY [6] - The total market capitalization is reported at 22,709 million CNY [6] Operational Insights - The company experienced significant revenue declines in Q3 2024, with domestic and international revenues down 22% and 38% year-on-year, respectively [12] - The report highlights that the company is increasing its marketing expenses to support consumer engagement during the destocking phase, which has impacted profitability [12][13]