Fuling Zhacai(SZ:002507) CMS·2025-04-28 03:56Investment Rating - The report maintains a "Strong Buy" rating for the company [3] Core Views - The company experienced a revenue decline of 4.75% in Q1, while profit improved by 0.24%, indicating pressure on revenue but an enhancement in profitability [1][6] - The acquisition of a 51% stake in Weizimei through a combination of equity and cash is expected to accelerate the company's diversification in product categories and channels [1][6] - The company has been strengthening its competitive advantages and improving channel management and internal efficiency, positioning itself for a recovery in 2025 amid a stable recovery in consumer spending [1][6] - Current market expectations are low, and the company's valuation is at a historical low, suggesting a potential opportunity for investment [1][6] Financial Performance Summary - Q1 total revenue was 713 million, down 4.75% year-on-year, while net profit attributable to the parent company was 272 million, up 0.24% year-on-year [6][8] - The gross margin improved to 56.0%, an increase of 3.85 percentage points year-on-year, primarily due to lower costs of raw materials [6][8] - The company plans to enhance shareholder returns through increased dividends as it enters a mature phase [1][6] Financial Projections - Projected total revenue for 2023 is 2,450 million, with a year-on-year decline of 4%, followed by a slight recovery in 2024 with a projected revenue of 2,387 million [2][15] - The company expects to achieve a net profit of 827 million in 2023, with a projected decline of 8% year-on-year [7][15] - EPS is projected to be 0.72 in 2023, with a gradual increase to 0.79 by 2027 [15]