QIANHE(SH:603027) Huachuang Securities·2024-10-31 02:52Investment Rating - The report maintains a "Recommended" rating for Qianhe Flavor Industry (603027) with a target price of 14.7 CNY, while the current price is 12.29 CNY [1]. Core Views - The company reported a revenue of 2.288 billion CNY for the first three quarters of 2024, a year-on-year decrease of 1.85%, and a net profit attributable to shareholders of 352 million CNY, down 9.19% year-on-year. In Q3 alone, revenue was 699 million CNY, reflecting a year-on-year increase of 12.63%, while net profit was 101 million CNY, down 22.58% year-on-year [1]. - The company is slowing its expansion pace to solidify its foundation, with Q3 revenue decline being less than expected. The decline is attributed to a high base from last year and intensified competition in the zero-additive segment, leading to a loss of market share [1]. - Gross margin improved slightly year-on-year to 37.5%, but high expense levels continued to pressure profitability, resulting in a net profit margin of 14.4% for Q3, down 1.9 percentage points year-on-year [1]. - The company is focusing on sustainable development by adjusting its strategy, including slowing down the pace of network expansion, supporting new distributors, and launching new products while maintaining brand value [1]. - The report anticipates that revenue may improve in Q4 due to a lower base, but the overall strategy remains focused on stabilizing income and protecting brand value [1]. Financial Summary - For 2023, total revenue is projected at 3.207 billion CNY, with a year-on-year growth rate of 31.6%. For 2024, revenue is expected to grow by 2.8% to 3.296 billion CNY, with net profit forecasted to decrease by 6.8% to 494 million CNY [2]. - The earnings per share (EPS) for 2024 is adjusted to 0.48 CNY, with projections for 2025 and 2026 at 0.54 CNY and 0.63 CNY, respectively [2]. - The current price-to-earnings (P/E) ratio is 26 for 2024, with expected ratios of 23 and 20 for 2025 and 2026 [2].