Shede Spirits (SH:600702) SINOLINK SECURITIES·2024-10-29 12:49Investment Rating - The report maintains a "Buy" rating for the company [4]. Core Views - The company reported a revenue of 4.46 billion RMB for Q3 2024, a year-on-year decrease of 15.0%, and a net profit attributable to shareholders of 670 million RMB, down 48.4% year-on-year [2]. - The revenue for Q3 2024 was 1.19 billion RMB, reflecting a 30.9% decline year-on-year, with a net profit of 80 million RMB, a significant drop of 79.2% year-on-year [2]. - The company is focusing on optimizing marketing expenses and improving cost efficiency despite the pressure from declining industry demand [3]. Summary by Sections Performance Review - For Q3 2024, the revenue breakdown shows high-end and regular liquor sales at 900 million and 150 million RMB respectively, with declines of 35.6% and 14.9% year-on-year [3]. - The company experienced a reduction in the number of distributors, with a net decrease of 46, leaving 2,763 distributors at the end of Q3 [3]. - The gross margin for Q3 2024 decreased by 11 percentage points to 63.7% due to structural weakening and cost pressures [3]. Financial Analysis - The report forecasts a 38% reduction in net profit for 2024, with expected revenues decreasing by 19.3% [4]. - The projected earnings per share (EPS) for 2024 is 2.78 RMB, with corresponding price-to-earnings (P/E) ratios of 24.6, 21.6, and 18.9 for 2024, 2025, and 2026 respectively [4]. - The company plans to repurchase 100 to 200 million RMB worth of shares for employee stock ownership plans or equity incentives [3]. Future Outlook - The report suggests that despite current challenges, there may be a potential recovery in business demand in 2025, indicating a need for continued monitoring of the company's performance [3].