JOEONE(601566) 国信证券·2024-11-08 08:10Investment Rating - The investment rating for the company is "Neutral" with a target price adjusted to 8.2 - 8.6 RMB [3][10]. Core Insights - The company experienced a 6% year-on-year decline in revenue for the third quarter, with a shift towards direct sales channels leading to improved gross margin and expense ratio [1][10]. - The company is a leading brand in the men's pants segment and has been focusing on channel optimization and upgrading to enhance operational quality [1][10]. - The forecast for net profit from 2024 to 2026 has been revised downwards, with expected figures of 1.8 billion, 2.4 billion, and 2.7 billion RMB respectively, reflecting a short-term performance pressure due to macroeconomic factors and channel changes [10][11]. Revenue and Profitability - The third quarter revenue decreased by 6.3% to 6.9 billion RMB, while the gross margin improved by 1.5 percentage points to 64.4% due to a higher proportion of direct sales [1][8]. - The overall expense ratio increased by 15.8 percentage points, primarily due to changes in store structure and increased operational costs [1][8]. - The net profit margin after excluding non-recurring items decreased by 4.6 percentage points to -3.7% [1][8]. Channel Performance - Direct sales revenue increased by 11.4% to 2.3 billion RMB, while franchise revenue decreased by 11.5% to 3.9 billion RMB [1][10]. - The number of direct stores increased by 6, while franchise stores decreased by 35 [1][10]. - Online revenue saw a decline of 13.1% to 0.5 billion RMB, with a gross margin drop of 7.6 percentage points [1][10]. Brand Performance - Revenue for the main brand, Jiumuwang, decreased by 3.1% to 4.2 billion RMB, while the FUN and ZIOZIA brands saw declines of 49.2% and 29.7% respectively [1][10]. - The company launched a new line of flexible denim pants to meet evolving consumer demands [1][10]. Financial Forecasts - Revenue projections for 2024-2026 are adjusted to 32.2 billion, 34.3 billion, and 36.4 billion RMB, reflecting a growth of 5.4%, 6.4%, and 6.3% respectively [8][11]. - The gross margin is expected to improve to 65.0%, 65.2%, and 65.3% over the same period due to the higher performance of direct sales channels [8][11]. - The sales expense ratio is projected to increase significantly due to the higher proportion of direct sales [8][11].