Toly Bread(SH:603866) Haitong Securities International·2025-11-05 15:06Investment Rating - The report assigns a "Neutral" rating to the company, projecting an EPS of RMB 0.23, 0.27, and 0.30 for 2025, 2026, and 2027 respectively, with a target price of RMB 5.75 based on a 25x PE for 2025 [4][8]. Core Insights - The company continues to face pressure in Q3 2025, with revenue of RMB 1.44 billion, down 11.64% year-on-year, and a net profit attributable to shareholders of RMB 0.094 billion, down 35.05% year-on-year. The fundamentals are under pressure due to weak external demand and channel diversion [4][8]. - The gross profit margin fell by 0.02 percentage points year-on-year to 23.15%, while the net profit margin declined due to an increase in expense ratios. The sales, management, R&D, and finance expense ratios increased significantly [4][8]. - The company is exploring growth opportunities through channel penetration, new product development, and new channel layouts, with expectations for gradual stabilization and improvement as performance bases lower [9]. Financial Summary - Total revenue is projected to decline from RMB 6,759 million in 2023 to RMB 5,359 million in 2025, reflecting a decrease of 12.0% [3]. - Net profit attributable to shareholders is expected to decrease from RMB 574 million in 2023 to RMB 375 million in 2025, a decline of 28.2% [3]. - The company’s return on equity (ROE) is projected to decrease from 11.3% in 2023 to 7.2% in 2025 [3]. Regional Performance - In Q2 2025, the Central China region showed growth with a revenue increase of 7.78%, while other regions experienced declines, with North China down 10.14% and Northeast down 14.24% [4][8].