Investment Rating - The report maintains a "Buy" rating for the company with a target price of 45.89 CNY, based on a valuation of 149 billion CNY using the FCFF method [2][4][10]. Core Views - The company is experiencing weak sales performance, with a significant decline in revenue and net profit in 2024, attributed to a challenging consumption environment. The report anticipates a gradual recovery in 2025, contingent on macroeconomic factors [9][10]. - The company aims to optimize its product structure and deepen market operations, focusing on core markets and reducing inefficient SKUs by 50% [9][10]. Financial Forecasts - Revenue for 2024 is projected at 1.423 billion CNY, a decrease of 49.7% year-on-year, with a further decline expected in 2025 to 1.248 billion CNY [3][9]. - The net profit for 2024 is expected to be 0.1 billion CNY, down 97.7% year-on-year, with a recovery forecasted to 0.171 billion CNY in 2025 [3][9]. - The earnings per share (EPS) are projected to be 0.04 CNY in 2024, increasing to 0.53 CNY in 2025 and 0.62 CNY in 2026 [3][10]. Key Financial Metrics - The company reported a gross margin of 71.4% in 2024, down from 78.3% in 2023, and a net margin of 0.9%, a significant drop from 19.4% in the previous year [3][9]. - The total expenses ratio increased to 48.9% in 2024, reflecting a rise of 13.9 percentage points year-on-year, indicating higher operational costs [9][10]. - The company's cash flow remains robust, supporting its valuation despite the current challenges [10].

Core Viewpoint - The company reported significant declines in revenue and net profit for 2024 and Q1 2025, indicating a challenging market environment and weak sales performance across key product lines [1][2][3]. Financial Performance - In 2024, the company achieved revenue of 1.42 billion yuan, down 49.7% year-on-year, and a net profit of 10 million yuan, down 97.7% year-on-year [1]. - For Q4 2024, revenue was 230 million yuan, a decrease of 66.2%, with a net profit of -40 million yuan, reflecting a decline of 163.7% [1]. - In Q1 2025, revenue was 340 million yuan, down 30.3% year-on-year, and net profit was 30 million yuan, down 56.8% year-on-year [1]. - The overall gross margin for 2024 was 71.4%, a decrease of 7.0 percentage points, while the net profit margin was 0.9%, down 18.5 percentage points [2]. - The company’s expense ratio for the year was 48.9%, an increase of 13.9 percentage points, with specific increases in management, sales, and R&D expenses [2]. Product and Market Strategy - The company plans to focus on product structure optimization and deep market operations in 2025, aiming to enhance operational efficiency in core markets [3]. - A "2+2+2" strategic product system will be established, with plans to eliminate 50% of inefficient SKUs and optimize price distribution [3]. - Initial signs of improvement are noted with a 95% year-on-year increase in sales indicators, suggesting that reforms are beginning to take effect [3]. Future Outlook - The company has adjusted revenue and gross margin forecasts downward for 2025-2026 while increasing expense ratio expectations [3]. - Projected earnings per share for 2025-2027 are 0.53, 0.62, and 0.96 yuan, respectively, down from previous estimates [3]. - The company maintains a target equity value of 14.9 billion yuan, corresponding to a target price of 45.89 yuan, with a buy rating [3].