ORIENTAL YUHONG(SZ:002271) Tianfeng Securities·2024-11-01 03:42Investment Rating - The report maintains a "Buy" rating for the company, indicating an expected relative return of over 20% within the next six months [5][4]. Core Views - The company experienced a slight decline in revenue and a significant drop in profits, but cash flow has improved markedly, and the stock buyback plan reflects confidence in the company's long-term value [1][4]. - The company’s gross margin is expected to improve due to a slight decrease in costs, with a focus on enhancing business structure and increasing retail proportion [2][4]. - The report highlights that the company’s expense ratio has not effectively diluted due to declining revenue, but operating cash flow has shown significant improvement [3][4]. Financial Performance Summary - For the first three quarters of 2024, the company achieved revenue of 21.7 billion, a year-on-year decrease of 14.4%, with net profit attributable to the parent company at 1.277 billion, down 45.7% [1]. - The gross margin for the first three quarters was 29.1%, a slight increase of 0.07 percentage points year-on-year, while the third quarter gross margin was 28.92%, a decrease of 0.46 percentage points [2]. - The expense ratio for the first three quarters was 18.56%, an increase of 2.73 percentage points year-on-year, with the third quarter expense ratio at 18.49%, up 3.84 percentage points [3]. - The company’s operating cash flow for the first three quarters was -492 million, a decrease in outflow by 4.27 billion year-on-year, with a significant inflow of 835 million in the third quarter [3]. Stock Buyback Plan - The company announced a stock buyback plan with a total fund of no less than 500 million and no more than 1 billion RMB, with a buyback price not exceeding 19.30 RMB per share, representing 1.06%-2.13% of the total share capital [4].