Fuling Zhacai(SZ:002507)2025-05-15 04:43Investment Rating - The report maintains a "Buy" rating for Fuling Zhacai Group [1][5][7]. Core Views - The first quarter of 2025 showed weak performance with revenue of RMB 710 million, a year-on-year decline of 4.8%, while net profit attributable to the parent company was RMB 270 million, a slight increase of 0.2% [1][2]. - The company expects revenue growth of 8% in 2025, driven by improved sales strategies and marketing efforts, particularly in the restaurant channel [2][5]. - The acquisition of a 51% stake in Weimeiwei is anticipated to create synergies in channels and products, enhancing growth opportunities [3][4]. Summary by Sections Financial Performance - In Q1 2025, revenue decreased by 4.8% year-on-year, attributed to low seasonal demand and stable operations [2]. - The gross margin improved by 3.8 percentage points to 56.0% due to lower procurement costs for mustard [2]. - The company projects earnings per share (EPS) of RMB 0.75, RMB 0.82, and RMB 0.89 for 2025, 2026, and 2027 respectively [5]. Growth Strategy - The company is focusing on organic growth through enhanced marketing and sales integration, particularly for its mustard and radish products [2][5]. - The acquisition of Weimeiwei is expected to leverage the company's existing distribution channels and product offerings, targeting the B-end market for compound seasonings [3][4]. Valuation - The target price for the stock is set at RMB 16.50, reflecting a potential upside of 26% from the closing price of RMB 13.14 as of May 9, 2025 [7][8].