M&G(603899) KAIYUAN SECURITIES·2024-10-31 07:30Investment Rating - Investment rating: Buy (maintained) as of October 30, 2024 [1] Core Views - The company is experiencing pressure on its performance in Q3 2024, but there are expectations for operational margin improvement [1] - Revenue for Q1-Q3 2024 reached 17.11 billion yuan, a year-on-year increase of 7.9%, while net profit attributable to the parent company was 930 million yuan, down 6.8% [1] - The company aims to adjust its profit forecast due to weak downstream consumer demand and intensified competition [1] Financial Performance Summary - For Q1-Q3 2024, the gross margin was 20.5%, a decrease of 1.4%, and the net profit margin was 6.1%, down 0.5 percentage points [2] - In Q3 2024, the company reported a gross margin of 20.5% and a net profit margin of 6.6%, reflecting a decline of 2.1 percentage points [2] - Revenue breakdown for Q3 2024: writing tools 880 million yuan (+2.5%), student stationery 1.19 billion yuan (-8.4%), and office stationery 710 million yuan (+1.9%) [3] - Online sales showed strong performance with revenue of 400 million yuan in Q3 2024, an increase of 38.9% [3] Revenue and Profit Forecast - Projected revenue for 2024-2026: 15.59 billion yuan, 18.16 billion yuan, and 20.95 billion yuan respectively [1] - Projected net profit for 2024-2026: 1.69 yuan, 1.97 yuan, and 2.27 yuan per share respectively [1] - Expected revenue growth rates: 9.5% in 2024, 14.3% in 2025, and 14.5% in 2026 [4] - Expected net profit growth rates: 2.1% in 2024, 16.4% in 2025, and 15.4% in 2026 [4] Key Financial Ratios - Gross margin is expected to stabilize around 19.1% from 2025 to 2026 [4] - Net profit margin is projected to be 6.1% in 2024, improving slightly to 6.3% by 2026 [4] - Return on equity (ROE) is expected to be 17.4% in 2024, increasing to 18.1% by 2026 [4]