Core Viewpoint - The article highlights significant concerns regarding the quality control of products at Sam's Club, particularly in the context of fresh produce and meat, suggesting a systemic failure in their quality assurance processes [14][32]. Group 1: Quality Control Issues - Customers have reported multiple instances of receiving spoiled or moldy fresh produce, such as carrots and cucumbers, leading to refunds and dissatisfaction with the service [4][6][14]. - A specific case involved a customer receiving pork ribs that were spoiled upon delivery, raising questions about the freshness and safety of meat products sold by Sam's Club [13][14]. - The frequency of complaints about product quality has increased since July, indicating a potential decline in Sam's Club's quality control standards [9][14]. Group 2: Management and Strategic Changes - The change in leadership at Sam's Club, with the appointment of Jane Ewing as the new president, has been linked to a perceived decline in product selection and quality control [14][15]. - Under the new management, there has been a shift towards cost-cutting measures and a focus on efficiency, which may have compromised product quality [15][16]. - The article suggests that the introduction of more mainstream brands into Sam's Club's offerings may be driven by profit margin considerations rather than maintaining high-quality standards [16][22]. Group 3: Market Position and Consumer Perception - Sam's Club has become a significant player in the snack food market, with many food companies seeing entry into Sam's Club as a catalyst for stock price increases [20][21]. - The company has been expanding rapidly, with a notable increase in the number of stores, but this growth may be outpacing its ability to maintain quality control [30][33]. - Membership numbers have surpassed 5 million, generating substantial revenue, but the perceived value of membership is declining due to quality issues, leading to customer dissatisfaction [31][32].

Investment Rating - The report gives a "Strong Buy" rating for the company, marking its first coverage [4][8]. Core Viewpoints - The company is expected to improve gradually each quarter, leveraging its product flavor development advantages and expanding its product range [1][27]. - The company has shown strong growth potential with a 6-year CAGR of 16.32% in revenue and 21.00% in net profit from 2018 to 2024 [1][29]. - The company is undergoing channel reforms, which may cause short-term performance dips but are expected to lead to more efficient distribution and direct sales channels in the long run [1][30]. Summary by Relevant Sections Company Overview - The company specializes in the research, production, and sales of leisure foods, with main product categories including green peas, sunflower seeds, broad beans, and mixed nuts [5][25]. Financial Performance - Revenue is projected to decline by 2.92% in 2025, followed by growth rates of 13.29% and 11.14% in 2026 and 2027, respectively [9]. - The net profit for 2025 is estimated at 254.07 million, with a significant drop of 32.46% compared to the previous year, but is expected to recover in subsequent years [9][8]. Product Dynamics - The mixed nuts and bean products category is expected to maintain a CAGR of 32.37% from 2019 to 2024, with a growth rate of 39.8% in 2024 [2][3]. - The company has a strong focus on flavor development, which is a key factor for consumer purchasing decisions [2][3]. Channel Dynamics - The company is enhancing its e-commerce strategy, with a 12.42% increase in e-commerce revenue in the first half of 2025, despite overall revenue decline [2][3]. - The snack wholesale channel is expected to account for over 20% of revenue in 2024, with continued double-digit growth [3]. Regional Dynamics - The company anticipates significant growth in overseas markets, particularly in Vietnam, which serves as a model for expansion into other Southeast Asian markets [1][35]. - Revenue from the East China and Southwest regions has shown remarkable growth, with increases of 45.31% and 49.18% in 2024, respectively [35]. Innovation and Market Trends - The leisure snack market is projected to reach 972 billion by 2025, driven by rising disposable income and diverse consumption scenarios [67]. - The company is well-positioned to capitalize on the growing demand for healthy and innovative snack options, aligning with consumer trends [68].

Investment Rating - The investment rating for the company is "Accumulate" (maintained) [1] Core Views - The company is undergoing an active adjustment period in 2025, with short-term pressure on revenue and profit. The latest interim performance forecast has led to a downward adjustment in key assumptions regarding sales growth, channel expansion pace, and expense ratio improvement. However, the long-term product and channel expansion logic remains unchanged. The adjusted earnings per share (EPS) forecasts for 2025-2027 are 3.33, 4.08, and 4.68 yuan respectively, down from previous forecasts of 5.37 and 6.52 yuan for 2025 and 2026. Given the company's multi-brand and multi-channel layout, the recovery in profitability is highly certain. A price-to-earnings (PE) ratio of 19 times for 2025 is suggested, corresponding to a target price of 63.27 yuan, maintaining the "Accumulate" rating [5][10]. Financial Performance Summary - The company’s projected financial performance for 2023A to 2027E is as follows: - Revenue (million yuan): 1,848 (2023A), 2,257 (2024A), 2,341 (2025E), 2,668 (2026E), 2,985 (2027E) with year-on-year growth rates of 27.4%, 22.2%, 3.7%, 13.9%, and 11.9% respectively [7][12] - Operating profit (million yuan): 406 (2023A), 441 (2024A), 368 (2025E), 450 (2026E), 516 (2027E) with year-on-year growth rates of 91.7%, 8.7%, -16.6%, 22.4%, and 14.6% respectively [7][12] - Net profit attributable to the parent company (million yuan): 329 (2023A), 376 (2024A), 310 (2025E), 381 (2026E), 436 (2027E) with year-on-year growth rates of 107.8%, 14.3%, -17.5%, 22.6%, and 14.7% respectively [7][12] - Earnings per share (yuan): 3.53 (2023A), 4.04 (2024A), 3.33 (2025E), 4.08 (2026E), 4.68 (2027E) [7][12] Market Performance Summary - The company's absolute performance over different time frames is as follows: - 1 week: +0.75% - 1 month: -4.07% - 3 months: -20.17% - 12 months: +18.59% [2]