Haitong sec released a research report stating that it gives U-presid china (00220) an "outperform" rating, expecting the company's total operating revenue for 2024-2026 to be 31.087/32.891/34.632 billion yuan respectively, main business revenue to be 30.858/32.662/34.403 billion yuan respectively, and net income to be 1.925/2.179/2.452 billion yuan respectively, with a reasonable value range of 8-10 HKD. The bank believes that with the upcoming Chinese New Year consumption peak and the continuous new contributions from the company's diversified channel development, it is bullish on the company's beverage business continuing to maintain rapid growth in the fourth quarter.

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

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 company's disclosed "Unaudited Financial Information" on November 9, 2023, the company achieved an unaudited after-tax profit of 1.467 billion yuan for the first three quarters of 2023, hence the cumulative 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 hit a record high for the same period in history. Furthermore, considering that the net operation gain from other business in the first half of 2023 reached 0.371 billion yuan (only about 42.71 million yuan in the first half of 2024), eliminating this impact corresponds to a year-on-year increase of over 45% in the after-tax profit for the first three quarters.

Looking at the single third quarter, the company achieved an unaudited after-tax profit of 0.67 billion yuan (YOY 13.45%) in 24Q3, while growing 31.68% quarter-on-quarter compared to 24Q2. Referring to Wind, the DCE palm oil index average price in 24Q3 increased by 4.46% compared to the average price in 23Q3, thus, in the single third quarter, under the backdrop of significant price increases in palm oil, the company continued to maintain steady 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 ready-to-drink scenarios, continuously expanding dining, family, gift, and group purchase scenarios; promoting the expansion layout of high-performance terminal points, continuing to intensify freezing, and empowering digitalization. In addition, the company laid out low-sugar and sugar-free dual product lines to respond to the new health consumption trend, with the new sugar-free product "Spring Breeze Green Tea" launched at a retail price of 4 yuan. In 24H1, the company's beverage business achieved 10.024 billion yuan (YOY 8.3%).

Risk warning: (1) Decline in market demand, (2) Product promotion not as expected, (3) Fluctuation in raw material prices, (4) Food safety issues.