BIEM(002832) HTSC·2024-11-01 03:40Investment Rating - The report maintains a "Buy" rating for the company with a target price of RMB 23.92 [6][15]. Core Views - The company has shown robust growth despite uncertainties in consumer recovery, with a 7.30% year-on-year increase in revenue to RMB 3.00 billion for the first three quarters of 2024, and a slight increase in net profit of 0.55% to RMB 762 million [1][4]. - The company is expanding its brand matrix and has launched international brands like CERRUTI 1881 and KENT&CURWEN, which are expected to drive growth in the luxury segment [2][4]. - The company is focusing on high-end consumers, successfully building user barriers, and differentiating itself from competitors amid a "cost-performance" consumption trend [2][4]. Summary by Sections Financial Performance - In Q3 2024, the company reported a revenue decline of 4.37% year-on-year to RMB 1.06 billion, while the gross margin decreased by 1.95 percentage points to 73.79% [2][3]. - The management expense ratio increased by 2.19 percentage points to 12.20% due to the costs associated with building overseas brand teams [2][3]. - The net profit margin decreased by 4.17 percentage points to 26.60% [2]. Operational Efficiency - As of Q3 2024, inventory increased by 28.14% year-on-year to RMB 888 million, primarily due to winter stock preparations [3]. - The company maintains a healthy cash flow with net cash from operating activities at RMB 652 million [3]. Profit Forecast and Valuation - The company is projected to achieve net profits of RMB 911 million, RMB 1.05 billion, and RMB 1.20 billion for 2024, 2025, and 2026, respectively, with corresponding EPS of RMB 1.60, RMB 1.84, and RMB 2.11 [4][19]. - The report anticipates a stable gross margin of 77.5% from 2024 to 2026, with a gradual decline in sales and management expense ratios [4][19]. Market Positioning - The company is expected to maintain a steady expansion pace, with a projected increase in the number of direct and franchise stores by 40 each year from 2024 to 2026 [9]. - The online channel is anticipated to grow significantly, with revenue projections of RMB 214 million, RMB 236 million, and RMB 260 million for 2024, 2025, and 2026, respectively [9].