LFX(SH:600612) Orient Securities·2024-10-31 03:48Investment Rating - The report maintains a "Buy" rating for the company, with a target price of 68.04 CNY based on an 18x PE valuation for 2024 [2][3] Core Insights - The company reported a revenue of 52.582 billion CNY for the first three quarters of 2024, a year-on-year decline of 15.3%, and a net profit attributable to shareholders of 1.78 billion CNY, down 9.6%. In Q3 alone, revenue and net profit fell by 41.9% and 46.2% respectively, which was below market expectations [1] - High gold prices have suppressed end-user demand, with SGE gold T+D prices reaching 595.2 CNY per gram by the end of September 2024, marking an increase of 8.3% since early July and 24% since early January. This has led to a noticeable wait-and-see attitude among consumers, resulting in decreased enthusiasm among distributors [1] - The company's gross margin in Q3 2024 decreased by 1 percentage point to 6.5%, attributed to a higher proportion of revenue from gold trading and the company's decision to offer discounts to distributors. Selling and administrative expense ratios increased by 0.3 and 0.6 percentage points year-on-year, likely due to slower revenue growth [1] - The inventory turnover days for the first three quarters were 53 days, a decrease of 3 days year-on-year. The net cash inflow from operating activities in Q3 2024 was 1.43 billion CNY, compared to a net outflow in the same period last year [1] - Looking ahead, the report anticipates that as gold prices stabilize, end-user consumption demand is expected to gradually recover. The company is seen to have long-term competitive advantages due to its "century-old brand heritage and quality distributor resources," and internal operational improvements are expected to further enhance operational potential [1] Financial Forecast and Adjustments - Based on the Q3 report, the earnings forecast has been adjusted, with expected earnings per share for 2024, 2025, and 2026 projected at 3.78 CNY, 4.37 CNY, and 4.88 CNY respectively, down from previous estimates of 4.49 CNY, 4.94 CNY, and 5.47 CNY [2][6]