YouYou Foods(SH:603697) Southwest Securities·2024-10-31 14:45Investment Rating - The report maintains a "Buy" rating for Youyou Food (603697) with a target price of 10.56 CNY over the next six months [1][6]. Core Insights - The company reported a significant performance in Q3 2024, with revenue reaching 3.6 billion CNY, a year-on-year increase of 28%, and a net profit of 0.45 billion CNY, up 75.2% year-on-year, exceeding market expectations [1]. - The rapid expansion of new channels has contributed to explosive growth in other business segments, particularly in the membership-based warehouse supermarket channel [1][4]. - The company plans to distribute a cash dividend of 1 CNY per 10 shares to all shareholders [1]. Summary by Sections Financial Performance - For the first three quarters of 2024, Youyou Food achieved a revenue of 8.9 billion CNY, a 16.8% increase year-on-year, and a net profit of 1.2 billion CNY, up 14.3% year-on-year [1]. - In Q3 2024 alone, revenue was 3.6 billion CNY, with a net profit of 0.45 billion CNY, marking substantial growth compared to the previous year [1]. Business Segments - Revenue from various segments in Q3 included 2.2 billion CNY from chicken feet, 0.2 billion CNY from pig skin jelly, and 0.7 billion CNY from other businesses, with growth rates of +3.6%, +17.2%, and +1593% respectively [1]. - The company’s online and offline channel revenue growth rates were +263% and +12.9% respectively, indicating strong performance in online sales due to a low base effect [1]. Cost and Profitability - The gross margin for Q3 2024 was 30.1%, with a slight year-on-year decrease of 0.6 percentage points, while the single-quarter gross margin improved to 28.9%, up 1.9 percentage points year-on-year [1]. - The net profit margin increased by 3.4 percentage points year-on-year to 12.6%, driven by cost reductions and effective sales expense management [1]. Market Outlook - The report highlights the potential for growth in the snack food industry, particularly in spicy snack foods, which are favored by younger consumers [1]. - The company is expected to benefit from its established market share of over 30% in the chicken feet segment and aims for continued expansion into new retail channels [1][4]. Earnings Forecast - The projected earnings per share (EPS) for 2024, 2025, and 2026 are 0.36 CNY, 0.48 CNY, and 0.62 CNY respectively, with corresponding dynamic price-to-earnings (PE) ratios of 24, 18, and 14 [2][6].