DAFENG INDUSTRY(603081) 国泰君安·2024-11-04 02:19Investment Rating - The report maintains an "Overweight" rating for the company, with a target price of RMB 12.34, down from the previous target of RMB 13.43 [1][4] Core Views - The company's performance fell short of expectations, with Q3 2024 revenue declining by 15.96% YoY to RMB 571 million and net profit attributable to shareholders dropping by 97.61% YoY to RMB 2 million [1] - The company is expected to benefit from local debt resolution policies, with potential increases in funding for cultural, sports, and tourism construction projects [1] - The company has secured significant orders totaling RMB 479 million since July 2024, which will support performance improvement [1] - The company is actively exploring innovative business segments such as digital art technology, tourism performances, and venue operations, which could provide additional growth opportunities [1] Financial Summary - Revenue for 2024 is projected to be RMB 1.773 billion, an 8.5% decline from 2023, with a recovery expected in 2025 and 2026 with growth rates of 18.5% and 18.8% respectively [2] - Net profit attributable to shareholders is forecasted to grow by 13.2% in 2024, reaching RMB 114 million, with further growth of 31.3% and 34.0% in 2025 and 2026 [2] - EPS for 2024 is estimated at RMB 0.28, increasing to RMB 0.37 in 2025 and RMB 0.49 in 2026 [2] - ROE is expected to improve from 3.9% in 2024 to 6.3% by 2026 [2] Industry and Market Position - The company operates in the social services industry, focusing on cultural, sports, and tourism integration services [4] - The company is positioned as a leader in the integrated services sector for cultural, sports, and tourism, with a strategic shift towards diversified growth [8] Valuation Metrics - The company's current P/E ratio is 36.11x for 2024, expected to decrease to 20.53x by 2026 [2] - The P/B ratio is 1.39x for 2024, with a gradual decline to 1.29x by 2026 [9] - The P/S ratio is projected at 2.33x for 2024, decreasing to 1.65x by 2026 [9] Recent Developments - The company has won several major projects, including the Sichuan Universiade Cultural Development Theater and the Tianjin Dongli Lake Real Performance Project, totaling RMB 479 million [1] - The company is exploring new business areas such as digital art technology and tourism performances, which could drive future growth [1]