Core Viewpoint - The company is expected to enter a profit release cycle starting in 2025, driven by favorable cost and capacity dynamics, alongside potential price increases due to demand recovery [2][3]. Group 1: Profit Release Cycle - Historical profit release cycles have shown that the company generally outperforms the food and beverage sector, with significant profit elasticity observed in 2009, 2016-2018, and 2020 [1]. - The three historical profit release cycles indicate that profit elasticity is primarily driven by faster price increases while sugar molasses costs remain low or decline [1]. - The company’s net profit margin increased by 6.8 percentage points in 2009, 10.7 percentage points from 2015-2017, and 3.6 percentage points in 2020, highlighting the correlation between cost management and pricing strategies [1]. Group 2: Future Outlook - The company anticipates maintaining double-digit revenue growth, with domestic demand stabilizing and overseas market expansion contributing to high growth rates [2]. - The sugar molasses price is expected to decline due to supply expansion, weak downstream demand, and falling corn prices, with recent bids in Guangxi dropping to 1000-1100 RMB per ton [2]. - The company is entering a favorable cycle where both cost and capacity pressures are expected to ease, potentially leading to price increases if demand recovers [2]. Group 3: Investment Recommendations - The company maintains previous profit forecasts, expecting net profits of 1.64 billion, 1.92 billion, and 2.19 billion RMB for 2025-2027, representing year-on-year growth of 23.6%, 17.1%, and 14.4% respectively [3]. - The current price-to-earnings ratio is projected at 21, 18, and 16 times for the respective years, indicating that the company is still at a historically low valuation [3]. - The company is positioned at a fundamental turning point, suggesting a strategic opportunity for investment during this valuation bottom [3].

Investment Rating - The report maintains a "Buy" rating for the company, indicating a positive outlook for future performance [4][6]. Core Views - The company is expected to enter a profit release cycle starting in 2025, driven by favorable cost and capacity dynamics, alongside potential price increases due to demand recovery [3][4]. - Historical profit release cycles have shown that the company typically outperforms the food and beverage sector during these periods, with significant profit elasticity contributing to excess returns [1][14]. Summary by Sections Stock Price Review - The company has historically demonstrated excess returns during profit release cycles, particularly noted in years such as 2009, 2016-2018, and 2020, attributed to faster profit elasticity release compared to the sector [1][14]. Profit Cycle Review - The report highlights three historical profit release cycles: 1. In 2009, net profit margin increased by 6.8 percentage points, driven by accelerated overseas revenue growth and a decline in costs [2][19]. 2. From 2015 to 2017, the company experienced a cumulative net profit margin increase of 10.7 percentage points, aided by reduced depreciation pressure and proactive price increases amidst a favorable demand environment [2][33]. 3. In 2020, a strong demand for small packaging products led to a 3.6% increase in net profit margin, primarily due to proactive pricing strategies [2][51]. Current Outlook - The company is expected to maintain double-digit revenue growth, with domestic demand stabilizing and overseas markets showing high growth potential [3][4]. - The cost cycle is anticipated to benefit from a decline in sugar molasses prices, with projections indicating a significant drop to 1000-1100 RMB/ton by January 2025 [3][4]. - The production capacity cycle is nearing the end of its investment phase, which is expected to alleviate depreciation pressure post-2023 [3][4]. - Historical trends suggest that the company can increase prices in response to demand recovery, particularly in a balanced capacity environment [3][4]. Financial Forecast and Valuation - The company is projected to achieve net profits of 1.64 billion, 1.92 billion, and 2.19 billion RMB for the years 2025, 2026, and 2027, respectively, reflecting year-on-year growth rates of 23.6%, 17.1%, and 14.4% [4][5]. - The current price-to-earnings (P/E) ratios for the forecasted years are 21, 18, and 16 times, indicating that the stock is still trading at historically low valuations [4][5].