JGJC(000799) Huaxin Securities·2024-11-03 11:18Investment Rating - The report maintains a "Buy" investment rating for the company [5] Core Views - The company's performance is under significant pressure, with revenue and profit falling short of expectations. For the first three quarters of 2024, total revenue was 1.191 billion yuan, a decrease of 44.41% year-on-year, and net profit attributable to shareholders was 56 million yuan, down 88.20% year-on-year [2][3] - The company is undergoing a structural adjustment in its product offerings, with a shift in expense allocation from B-end to C-end, leading to a decline in sales of mid-to-high-end products. This has resulted in a downward trend in product structure and revenue performance [3] - Despite short-term performance challenges, the company is expected to continue its expense reform, aiming for long-term growth. The price increase of its premium products indicates a strengthening brand influence, and the acceleration of sales for its secondary high-end products reflects an improvement in market impact [4] Summary by Sections Financial Performance - For Q1-Q3 2024, total revenue was 1.191 billion yuan, down 44.41% year-on-year, and net profit was 56 million yuan, down 88.20% year-on-year. In Q3 2024, total revenue was 197 million yuan, a decrease of 67.24% year-on-year, with a net loss of 65 million yuan [2] - The gross margin for Q1-Q3 2024 was 71.81%, down 7.09 percentage points year-on-year, while the net margin was 4.74%, down 17.60 percentage points year-on-year. In Q3 2024, the gross margin was 64.04%, down 11.65 percentage points year-on-year, and the net margin was -32.77%, down 42.22 percentage points year-on-year [2] - Operating cash flow was under pressure, with net cash flow from operating activities for Q1-Q3 2024 at -411 million yuan, compared to 57 million yuan in the same period last year [2] Expense Management - The company has shifted its expense allocation strategy, focusing more on consumer-oriented spending, which has led to a rigid expense structure and high initial investments. This has contributed to the underperformance in profits [3] Earnings Forecast - The earnings per share (EPS) estimates for 2024-2026 have been adjusted to 0.33 yuan, 0.46 yuan, and 0.60 yuan, respectively, down from previous estimates of 0.87 yuan, 1.01 yuan, and 1.18 yuan. The current stock price corresponds to price-to-earnings (PE) ratios of 155, 111, and 85 times for the respective years [4][7]