Futong Financial App learned that Haitong Securities released a research report stating that it has an "outperform the market" rating for U-Presid China (00220), with estimated total business revenue of 31.087/32.891/34.632 billion yuan from 2024 to 2026, main operating income of 30.858/32.662/34.403 billion yuan, net income attributable to shareholders of the parent company of 1.925/2.179/2.452 billion yuan, and a reasonable value range of 8-10 Hong Kong dollars. The bank believes that with the upcoming peak consumption during the Spring Festival, as well as the continuous contribution from the company's diversified channel expansion, the company is bullish on the fast growth of the beverage business in the fourth quarter.

Event: On November 12, 2024, the company disclosed an announcement of "Unaudited Financial Information," in which the company achieved unaudited after-tax profit of 1.636 billion yuan in the first three quarters of 2024 (as of September 30, 2024).

The main points of Haitong Securities are as follows:

The after-tax profit level for the first three quarters hit a record high, with the after-tax profit continuing to maintain steady year-on-year growth in the single third quarter against the backdrop of rising palm oil prices.

Referring to the unaudited financial information disclosed by the company on November 9, 2023, the company achieved unaudited after-tax profit of 1.467 billion yuan in the first three quarters of 2023. Therefore, the company's profit for the first three quarters of 2024 increased by 11.49% year-on-year, and the after-tax profit for the first three quarters set a new high for the same period in history. In addition, considering that the other operating net income in the first half of 2023 reached 0.371 billion yuan (only about 42.71 million yuan in the first half of 2024), excluding this impact, the after-tax profit for the corresponding first three quarters increased by more than 45% year-on-year.

Looking at the third quarter alone, the company achieved unaudited after-tax profit of 0.67 billion yuan in Q3 2024 (YOY 13.45%), and a 31.68% increase from Q2 2024. Referring to Wind, the DCE palm oil index's average price in Q3 2024 increased by 4.46% compared to Q3 2023, so despite the significant increase in palm oil prices in the third quarter, the company continued to maintain a robust profit growth.

Tea beverages performed exceptionally well, with Hai Zhi Yan continuously enhancing growth momentum.

In the first half of 2024, the company focused on market channels, covering multiple consumer scenarios. In addition to traditional on-the-go scenarios, it continued to explore dining scenarios, home scenarios, gifting scenarios, group-buying scenarios, etc. It drove the expansion layout of high-performance terminal sales points, continued to enhance frozen products, and empowered digitalization. Furthermore, the company launched a dual product line of low-sugar and sugar-free to adapt to the new trend of healthy consumption, with the new sugar-free product "Spring Green Tea" priced at 4 yuan. In H1 2024, the company's beverage business achieved 10.024 billion yuan (YOY +8.3%).

Risk Warning: (1) Market demand decline, (2) Product promotion below expectations, (3) Fluctuations in raw material prices, (4) Food safety issues.