Jiajiayue(SH:603708) Xinda Securities·2024-02-04 16:00Investment Rating - The report assigns an "Accumulate" rating to the company [2]. Core Views - The hard discount retail market in China is still in its early stages, with a penetration rate of less than 4%, compared to over 10% globally, indicating significant growth potential [2][40]. - The company is exploring hard discount transformations by launching new formats such as bulk snack stores and discount supermarkets, aiming to enhance operational efficiency [2][13]. - The company has a strong operational capability and regional supply chain advantages, positioning it well to capitalize on the growth of discount retail [2][13]. Summary by Sections Investment Logic - The core of hard discounting is the pursuit of extreme cost-performance ratios, exemplified by companies like Aldi and Costco, which achieve higher ROE through efficient inventory turnover and lower operating costs [11][16]. - The shift towards demand-oriented retailing is evident, with consumers increasingly prioritizing value for money, especially in a slowing economy [12][51]. Company Overview - The company is a leading supermarket chain in Shandong, focusing on fresh produce and multi-format retail channels [13]. - In 2023, the company introduced new business formats targeting community stores and high cost-performance offerings [13]. - Historical revenue and profit growth have been stable, with expectations of achieving performance targets for equity incentives in 2024-2025 as new business lines accelerate [14]. Financial Forecast and Investment Recommendations - The company is expected to see significant profit growth, with projected net profits of 139 million, 300 million, and 365 million yuan for 2023, 2024, and 2025 respectively, representing year-on-year growth rates of 158%, 115%, and 22% [14]. - The target market capitalization for 2024 is set at 6.6 billion yuan, reflecting confidence in the company's growth trajectory [14].