Shede Spirits (SH:600702) Soochow Securities·2024-10-29 06:42Investment Rating - The investment rating for the company is "Accumulate" (maintained) [1] Core Views - The company reported a revenue of 446 million and a net profit of 67 million for the first three quarters of 2024, reflecting a year-on-year decline of 15.0% and 48.3% respectively. In Q3 alone, the revenue and net profit were 119 million and 8 million, showing a year-on-year decrease of 30.9% and 79.2% [2] - The revenue decline in Q3 was in line with expectations, as the company continued its strategy of controlling volume and stabilizing prices for its mid-to-high-end products, leading to pressure on revenue and profit margins [3] - The company plans to repurchase shares worth 100 to 200 million yuan to boost employee stock ownership plans or equity incentives, with a maximum repurchase price of 91 yuan per share. This move is seen as a sign of confidence in the company's long-term strategy [5] Summary by Sections Financial Performance - For 2024E, the total revenue is projected to be 5,818 million yuan, down 17.83% year-on-year, with a net profit of 918.15 million yuan, reflecting a significant decline of 48.17% [1][4] - The Q3 gross profit margin decreased by 10.9 percentage points to 63.7%, primarily due to the impact of product structure adjustments [4] - The company maintained a stable cash flow with a cash collection ratio of 0.96 in Q3, and the number of distributors remained stable at 2,763 [4] Strategic Initiatives - The new president, who took office at the end of 2023, is expected to leverage modern management experience in the consumer goods sector to enhance the company's strategic planning and top-level understanding [5] - The company aims to strengthen its market share in banquet services through digital means and expand its reach into lower-tier markets [5] Valuation Metrics - The current market capitalization corresponds to a P/E ratio of 24.73 for 2024E, 21.98 for 2025E, and 19.15 for 2026E [1][5] - The projected earnings per share (EPS) for 2024E is 2.76 yuan, significantly lower than previous estimates [1][5]