HUAKANG(SH:605077)2024-11-05 11:35Investment Rating - The investment rating for Huakang Co., Ltd. is "Outperform" [5][11]. Core Views - The company's Q3 performance remains under pressure, with a revenue of 2.106 billion yuan, a year-on-year increase of 3%, and a net profit attributable to shareholders of 187 million yuan, a year-on-year decrease of 32% [5]. - The company is planning to acquire Henan Yuxin Sugar Alcohol Co., Ltd. to initiate industry consolidation, which is expected to enhance its market position in core products [5]. - The company is experiencing a temporary decline in gross margin due to reduced shipments of high-margin products like crystalline xylitol, but new capacity from the Zhoushan base is anticipated to drive future growth [5][6]. Summary by Sections Market Data - Closing price: 15.14 yuan - One-year high/low: 26.15/11.85 yuan - Price-to-book ratio: 1.6 - Dividend yield: 4.62% - Circulating A-share market value: 4.497 billion yuan [2]. Financial Data - Net asset per share: 9.62 yuan - Debt-to-asset ratio: 49.11% - Total shares: 306 million, circulating A-shares: 297 million [3]. Performance Comparison - Q3 revenue: 7.47 billion yuan, year-on-year increase of 11%, quarter-on-quarter increase of 3% - Q3 net profit: 490 million yuan, year-on-year decrease of 46%, quarter-on-quarter decrease of 17% - Q3 gross margin: 19.52%, with year-on-year and quarter-on-quarter changes of -5.79 percentage points and -0.04 percentage points respectively [5]. Future Outlook - Revenue projections for 2024-2026 are adjusted to 2.68 billion, 4.00 billion, and 5.26 billion yuan respectively, with corresponding PE ratios of 17, 12, and 9 [5][6]. - The Zhoushan project is expected to start production in Q4 2024, significantly increasing the company's processing capacity and product offerings [5].