Three Squirrels Reports 52.22% Year-on-Year Decline in Net Profit Amidst Rising Sales Expenses

Recently, Three Squirrels Inc. 300783 received the备案通知书 from the China Securities Regulatory Commission (CSRC) for its H-share issuing and listing, drawing renewed attention to its progress in listing on the Hong Kong Stock Exchange. The company submitted its prospectus to the Hong Kong Stock Exchange on April 25 this year. According to its announcement, Three Squirrels plans to issue no more than 81,548,300 foreign-listed ordinary shares and list them on the Hong Kong Stock Exchange. If the listing is successful, Three Squirrels will become the first snack brand in China to achieve dual listing with both A-shares and H-shares.

Financial reports indicate that from 2022 to 2024, Three Squirrels achieved operating revenues of RMB 7.293 billion, RMB 7.115 billion, and RMB 10.622 billion, along with net profits of RMB 129 million, RMB 220 million, and RMB 408 million, respectively. The gross profit margins were 26.2%, 22.7%, and 23.8%. In the first half of this year, the company's operating revenue reached RMB 5.478 billion, a year-on-year increase of 7.94%, but its net profit attributable to shareholders fell significantly by 52.22% to RMB 138 million, indicating a situation of revenue growth without profit increase. Notably, the income from core nut products amounted to RMB 2.731 billion, a year-on-year decrease of 1.03%, marking it as the only category with declining revenue in the main business.

Additionally, Three Squirrels' sales expenses in the first half of the year amounted to RMB 1.119 billion, reflecting a year-on-year increase of 25.11%. Specifically, promotion and platform service fees rose from RMB 607 million in the same period last year to RMB 761 million. Revenue from e-commerce platforms also increased from RMB 4.090 billion to RMB 4.295 billion year-on-year. However, it's important to note that the net cash flow from operating activities for the first half of the year dropped significantly by 1075.08% year-on-year to -RMB 377 million, turning from profit to loss, which the company attributed to increased operational purchases during this period.

Moreover, Three Squirrels' monetary funds decreased by 40% from the end of the previous year to RMB 519 million, while short-term borrowings increased by 43% to RMB 513 million. Meanwhile, the semi-annual report revealed that NICE GROWTH LIMITED, the second-largest shareholder of Three Squirrels, under IDG Capital, reduced its shareholding ratio from 4.2% at the end of last year to 3.07%, divesting 4.5005 million shares. The ongoing developments of Three Squirrels' potential listing in Hong Kong will continue to be closely monitored.