Ligao Foods (SZ:300973) Huachuang Securities·2024-10-30 04:40Investment Rating - The report maintains a "Strong Buy" rating for the company with a target price of 49.5 CNY, compared to the current price of 35.40 CNY [1]. Core Views - The company has shown significant cost control effectiveness, leading to continuous improvement in profitability despite ongoing pressure on terminal demand and a decline in supermarket sales [1]. - The company’s revenue for the first three quarters of 2024 reached 2.717 billion CNY, a year-on-year increase of 5.22%, while the net profit attributable to shareholders was 203 million CNY, up 28.21% year-on-year [1]. - The report emphasizes the company's systematic and efficient operational capabilities, which have been established over recent years through various reforms, positioning it well for potential recovery in demand if external conditions improve [1]. Financial Summary - Revenue and Profitability: - Total revenue for Q3 2024 was 936 million CNY, a slight decrease of 1.11% year-on-year, while net profit for the same period was 68 million CNY, an increase of 35.07% year-on-year [1]. - The gross margin for Q3 2024 was 31.3%, a decrease of 0.5 percentage points year-on-year, attributed to promotional discounts and a higher proportion of lower-margin products [1]. - Cost Control: - The company has effectively reduced its sales, management, and R&D expense ratios to 10.5%, 6.9%, and 3.6% respectively, reflecting a significant reduction in costs compared to the previous year [1]. - Earnings Per Share (EPS): - The forecasted EPS for 2024-2026 is 1.61 CNY, 1.98 CNY, and 2.39 CNY respectively, with corresponding price-to-earnings (PE) ratios of 22, 18, and 15 [1][7]. Market Position and Future Outlook - The company is expected to benefit from the gradual recovery of the market and the elimination of weaker competitors, which may enhance its operational flexibility and profitability in the coming years [1]. - The report suggests that if external conditions improve, the company could exhibit significant performance elasticity, especially with its strategic focus on high-margin products and new customer segments [1].