Yanghe(SZ:002304) Guotai Junan Securities·2024-11-01 06:43Investment Rating - The report maintains an "Accumulate" rating with a target price of 95.66 CNY [3][4][13]. Core Views - The company's performance in Q3 2024 was below expectations, indicating a continued deep adjustment. However, given the company's competitive advantages, it is expected to seize opportunities in the next industry recovery after experiencing a bottoming out of performance [2][3][14]. - The report has revised down the earnings forecast for 2024-2026, with expected EPS of 5.21 CNY, 5.32 CNY, and 5.86 CNY, compared to previous estimates of 6.83 CNY, 7.20 CNY, and 7.71 CNY [3][13]. Summary by Sections Financial Performance - In Q3 2024, the company reported revenues of 4.641 billion CNY and a net profit of 631 million CNY, representing year-on-year declines of 44.82% and 73.03%, respectively [13]. - The company increased its promotional expenses to drive sales, which negatively impacted profit margins, leading to a net profit margin decrease of 14.2 percentage points year-on-year [3][14]. Market Position and Strategy - The company is currently in a phase of inventory destocking and channel profitability recovery, with expectations of organizational improvements. Despite the ongoing adjustments, the company's core advantages in base liquor and brand positioning remain intact, aligning with consumer trends [3][14]. Valuation Metrics - The report suggests that the target price of 95.66 CNY corresponds to a 20X dynamic PE for 2025, reflecting a potential recovery in consumer goods valuations amid economic recovery expectations [3][13].