lolo(SZ:000848)2024-10-31 06:39Investment Rating - The report maintains a "Buy" rating for the company, with a market price of RMB 8.83 and a sector rating of "Outperform" [1]. Core Views - The company reported a revenue of RMB 2.16 billion for the first three quarters of 2024, reflecting a year-on-year increase of 6.1%, while the net profit attributable to shareholders was RMB 420 million, down 5.5% year-on-year. The third quarter saw revenues and net profits of RMB 520 million and RMB 130 million, respectively, representing declines of 3.0% and 2.3% year-on-year. The weak performance is attributed to a sluggish consumption environment, but sales are expected to accelerate with the upcoming holiday season [3][5]. - The company is experiencing a cost inflection point, with a significant decrease in raw material costs, particularly bitter almonds, which fell by 26.1% quarter-on-quarter and 36.6% year-on-year in Q3 2024. This is expected to enhance profit margins in subsequent quarters [3][5]. - The company has announced a share buyback plan, intending to repurchase 30-60 million shares, which represents 2.9%-5.7% of the total share capital, at a price not exceeding RMB 11.75 per share. This move underscores the company's commitment to shareholder returns [3][5]. Summary by Sections Financial Performance - For the first three quarters of 2024, the company achieved a revenue of RMB 2.16 billion, up 6.1% year-on-year. In Q3 2024, revenue was RMB 520 million, down 3.0% year-on-year. The net profit for the same period was RMB 130 million, down 2.3% year-on-year [3][5]. - The gross profit margin improved to 40.7% in Q3 2024, an increase of 3.2 percentage points year-on-year, despite a slight decline in overall net profit margin to 23.9% [5][6]. Cost and Profitability - The company is witnessing a reduction in raw material costs, which is expected to positively impact profit margins. The cost of bitter almonds decreased significantly, leading to an anticipated increase in profitability in the coming quarters [3][5]. - The report projects revenue growth for 2024 and 2025 at RMB 3.18 billion and RMB 3.38 billion, respectively, with net profits expected to be RMB 641 million and RMB 743 million [4][6]. Shareholder Returns - The company plans to repurchase shares, indicating a strong focus on returning value to shareholders. The buyback amount is set to be significantly higher than previous repurchase amounts, reflecting the company's commitment to enhancing shareholder value [3][5].