ELLASSAY(SH:603808) GOLDEN SUN SECURITIES·2024-11-02 12:23Investment Rating - The report maintains a rating of "Accumulate" for the company, with an expected PE of 13.5 times for 2025 [6][8]. Core Views - The company has experienced a 4% year-on-year increase in revenue for Q1-Q3 2024, but its net profit attributable to shareholders has significantly decreased by 84% [2]. - The domestic business remains stable, while overseas operations are under pressure, leading to a substantial decline in profitability [4][6]. - The company is expected to improve its profitability quality in 2025-2026 as it optimizes its overseas business [6]. Summary by Sections Financial Performance - For Q1-Q3 2024, the company's revenue was 2.15 billion yuan, with a net profit of 20 million yuan, down 84% year-on-year [2]. - In Q3 2024, revenue was 700 million yuan, a 2% increase year-on-year, but the net profit was a loss of 40 million yuan, a 239% decline [3]. - The gross profit margin for Q1-Q3 2024 was 68.2%, up 1.3 percentage points year-on-year, while the net profit margin fell to 2.9%, down 5.8 percentage points [2]. Business Segments - Domestic revenue for Q1-Q3 2024 increased by 11.5%, while overseas revenue saw a significant decline, impacting overall performance [4]. - Online sales grew rapidly, with a 38% increase year-on-year, while offline sales decreased by 2% [4]. - Direct sales outperformed franchise sales, with direct sales revenue increasing by 10% compared to a 26% decline in franchise sales [4]. Brand Performance - Key brands such as ELLASSAY and Laurel showed positive sales growth, while other brands experienced declines due to fluctuations in consumer traffic [5]. - The total number of stores increased by 13 compared to the beginning of the year, indicating a steady expansion of the company's channel scale [5]. Inventory and Cash Flow - Inventory turnover days increased by 68.4 days to 374.6 days, with ending inventory up 22.8% year-on-year to 950 million yuan [6]. - The operating cash flow for Q1-Q3 2024 was 240 million yuan, indicating good cash flow management [6]. Future Outlook - The company anticipates a challenging profit performance in 2024 but expects significant improvements in profitability quality in 2025-2026 [6]. - Revenue projections for 2024-2026 are 3.004 billion yuan, 3.362 billion yuan, and 3.767 billion yuan, respectively [7].