Investment Rating - The report maintains a "Buy" rating for the company [1][4]. Core Views - The company's Q3 revenue and net profit attributable to shareholders increased by 0.11% and 9.10% year-on-year, respectively, with revenue showing improvement on a quarter-on-quarter basis. The net profit margin benefited from a decrease in raw material costs [1][4]. - The performance of mushroom sauce remains stable, while scallion oil sauce faces growth challenges. The company is actively addressing competitive issues and developing new channels, indicating that the scallion oil sauce has not yet reached its ceiling. There are expectations for a combination of online and offline channels to drive category recovery, along with contributions from other new products [1][4]. - The company anticipates EPS of 1.25 and 1.27 yuan for 2025 and 2026, respectively, corresponding to a valuation of 23X for 2025 [1][4]. Financial Performance Summary - For the first nine months of 2025, the company achieved revenue of 826 million yuan, a year-on-year decrease of 1.56%, and a net profit of 154 million yuan, an increase of 3.18%. In Q3 alone, revenue was 300 million yuan, up 0.11% year-on-year, and net profit was 53 million yuan, up 9.10% year-on-year [4]. - The gross margin for Q3 was 43.76%, an increase of 2.8 percentage points year-on-year, primarily due to lower prices for raw materials such as pepper and scallions. The selling expense ratio was 14.40%, down 0.5 percentage points year-on-year, while the management expense ratio was 5.93%, up 1.7 percentage points year-on-year [4]. - The company expects continued cost benefits and improved production efficiency from the launch of smart production lines, along with structural optimization leading to sustained gross margin improvement [4]. Future Outlook - The company is optimistic about the stable growth of mushroom sauce and anticipates new products like garlic sauce and zero-fat spicy sauce to contribute to growth in the coming year [4]. - The report highlights that the company is reducing promotional expenses in a weak recovery consumer environment, which, combined with cost reductions, is expected to enhance profitability [4].

Core Insights - The company reported its first revenue decline since going public, with a revenue of 524 million yuan in the first half of 2025, a year-on-year decrease of 2.5% [1] - The core seasoning food segment generated 310 million yuan, down 2.31% year-on-year, while the seasoning ingredient segment saw a revenue of 212 million yuan, down 1.31% but with a gross margin increase of 5.19 percentage points to 49.19% [1] - The e-commerce channel, particularly on platforms like Tmall and JD.com, experienced a significant sales drop of 10.69%, indicating challenges in online traffic acquisition and conversion efficiency [1] Business Challenges - The company's performance is primarily affected by its reliance on a few major products and intensified market competition [2] - The shiitake mushroom sauce, a key product, has seen a slowdown in growth due to brand influence issues and regional taste differences [2] - The Shanghai scallion oil product faced market challenges from low-priced infringing products and increased competition, leading to a decline in revenue despite maintaining category leadership [2] Strategic Adjustments - The company is initiating a multi-faceted strategic adjustment, including the sale of assets valued at 55.01 million yuan to refocus on core business [3] - New product promotion is centered around "flavor + health," with items like garlic sauce and zero-fat spicy sauce being highlighted [3] - The company is also venturing into the health sector with the development of ready-to-eat health products, leveraging its traditional Chinese medicine background for market promotion [3]

Core Viewpoint - In 2024, Zhongjing Food Co., Ltd. is poised for steady growth driven by comprehensive channel integration, product quality upgrades, and deep brand value dissemination, despite a challenging market environment [3] Financial Performance - In 2024, Zhongjing Food achieved operating revenue of 1,097.65 million yuan, a year-on-year increase of 10.40% [3] - The net profit attributable to shareholders was 175.40 million yuan, up 1.81% year-on-year, while the net profit after deducting non-recurring gains and losses was 166.72 million yuan, reflecting a growth of 1.83% [3] - The company has maintained positive growth in its main business for twelve consecutive years, showcasing its strong resilience and market competitiveness [3] - Zhongjing Food has distributed a total of 446 million yuan in cash dividends since its listing, with a proposed cash dividend of 8 yuan per 10 shares for 2024, resulting in a dividend payout ratio of 66.59% [3] Product Innovation and Market Expansion - The company emphasizes "good ingredients, good taste" and focuses on technological innovation, equipment upgrades, and lean production to enhance product quality and production efficiency [4] - The flagship product, Zhongjing Mushroom Sauce, has undergone a health transformation with a 20% reduction in oil and no added preservatives, while the packaging has been refreshed [4] - New product launches, including garlic sauce and zero-fat chili sauce, have expanded the product matrix and consumer reach [4] - Sales in the seasoning products segment reached 625 million yuan, a year-on-year increase of 12.12%, while e-commerce sales soared to 245.08 million yuan, up 29.86% [4] Brand Promotion and Consumer Engagement - Zhongjing Food adheres to the "three qualities" philosophy of brand, quality, and taste, systematically upgrading its brand visual system [5] - The company has launched new WeChat video accounts to enhance brand value communication through content marketing [5] Production and Operational Efficiency - Continuous optimization of production processes and establishment of enterprise standards have led to cost reduction and efficiency improvements [6] - The Nanyang Zhongjing Food Industrial Park project is progressing well, with the seasoning sauce workshop entering trial production by year-end [6] Strategic Focus and Future Outlook - The company is committed to a "flavor + health" strategy, focusing on core product development and enhancing user engagement through a comprehensive market layout [7] - Zhongjing Food plans to expand into the health food sector with the development of its first ready-to-eat health product, "Zhongjing Vital Ginseng" [8] - The company aims to enhance service capabilities for major clients in the seasoning and ingredient sector while refining its e-commerce operations [8] - Looking ahead, Zhongjing Food is focused on long-term growth, brand enhancement, and continuous innovation to become a trusted and innovative health food enterprise [8]