FENGLE SEED(SZ:000713) Guoxin Securities·2024-10-30 01:30Investment Rating - The investment rating for the company is "Outperform the Market" [1][3][4] Core Views - The company has shown good pre-sale performance for the new season, with contract liabilities at the end of Q3 increasing by 147% year-on-year. However, increased expenses have put short-term pressure on profitability [1][4][9] - The company's revenue for the first three quarters of 2024 was 1.72 billion yuan, a decrease of 10.32% year-on-year, primarily due to adjustments in the pesticide and fertilizer business [1][4] - The net profit attributable to the parent company for the first three quarters of 2024 was -71 million yuan, a decline of 181.02% year-on-year, mainly due to reduced income and significantly increased R&D and sales expenses [1][4] Summary by Sections Revenue and Profitability - In Q3 2024, the company achieved revenue of 392 million yuan, down 47.65% quarter-on-quarter and 38.83% year-on-year. The net profit attributable to the parent company was -49 million yuan, a decrease of 465.70% quarter-on-quarter and 107.51% year-on-year [1][4][5] - The total seed revenue for the 2023/2024 operating year was 851 million yuan, an increase of 28.64% year-on-year, with total sales volume at 66.48 million kilograms, up 10.31% year-on-year [1][4] Expense Analysis - Sales expenses for the first three quarters of 2024 were 102 million yuan, an increase of 19.63% year-on-year, with a sales expense ratio of 5.96%, up 1.50 percentage points year-on-year [1][4][9] - R&D expenses increased by 36.32% year-on-year to 70 million yuan, with an R&D expense ratio of 4.05%, up 1.39 percentage points year-on-year [1][4][9] Inventory and Cash Flow - As of July 31, 2024, the company had a corn seed inventory valued at 234 million yuan, up 91.34% year-on-year, while rice seed inventory was valued at 51 million yuan, down 23.12% year-on-year [1][4][9] - The operating cash flow for the first three quarters of 2024 was -113 million yuan, a decrease of 203.97% year-on-year, indicating short-term cash flow pressure [1][4][9] Future Outlook - The company is expected to benefit from the commercialization of genetically modified corn and the support of new shareholders to strengthen its core business [1][4][9] - Profit forecasts for the company are maintained, with expected net profits attributable to the parent company of 59 million yuan, 84 million yuan, and 120 million yuan for 2024, 2025, and 2026 respectively [1][4][9]