lolo(SZ:000848) Soochow Securities·2024-10-29 14:56Investment Rating - The report upgrades the investment rating to "Buy" based on the company's valuation and expected performance [3]. Core Views - The company reported a slight decline in revenue for the first three quarters of 2024, with total revenue of 2.159 billion yuan, a year-on-year increase of 6.10%, and a net profit attributable to shareholders of 419 million yuan, a year-on-year decrease of 5.49% [1]. - Despite overall consumer pressure, the company demonstrated resilience, with Q3 revenue and net profit showing only slight declines of 2.99% and 2.30% respectively [1]. - The cost of almonds is expected to reach a turning point, with Q3 gross margin improving to 40.68%, up 3.22 percentage points year-on-year, aided by lower almond prices in the new procurement season [1][2]. - Increased market investment led to a rise in the sales expense ratio to 9.95%, reflecting management's proactive approach to boost sales amid weak market demand [2]. - The company has initiated a significant share buyback plan, indicating a strong commitment to enhancing shareholder returns [2]. Summary by Sections Revenue and Profitability - For the first nine months of 2024, the company achieved total revenue of 2.159 billion yuan, with a year-on-year growth of 6.10%. The net profit attributable to shareholders was 419 million yuan, down 5.49% year-on-year [1]. - Q3 results showed revenue of 525 million yuan and net profit of 126 million yuan, reflecting slight declines of 2.99% and 2.30% respectively [1]. Cost and Margin Analysis - The gross margin for Q3 was 40.68%, an increase of 3.22 percentage points year-on-year, while the first half of the year saw a gross margin of 41.80%, down 3.41 percentage points [1]. - The cost of almonds has decreased significantly, with prices dropping over 20% in the July-September period compared to the previous year, contributing to margin recovery [1]. Market Strategy and Management Actions - The sales expense ratio increased to 9.95%, up 4.39 percentage points year-on-year, as the company increased marketing expenditures to stimulate sales [2]. - A large share buyback plan has been announced, aiming to repurchase 30 to 60 million shares, reflecting management's commitment to shareholder value [2]. Financial Forecast - Revenue forecasts for 2024-2026 are set at 3.132 billion, 3.330 billion, and 3.554 billion yuan respectively, with EPS estimates of 0.59, 0.67, and 0.73 yuan [3]. - The current market valuation corresponds to P/E ratios of 14.7x, 12.8x, and 11.8x for the respective years, indicating an attractive valuation [3].