Three Squirrels Inc. recently issued a notice to distributors announcing price adjustments for select products effective November 1. The changes affect categories such as nuts, roasted seeds, and dried fruits, with increases ranging from RMB 0.2 to RMB 10 per unit.

The adjustment covers 35 products, including a RMB 2 hike per 100g pack of pistachios for retail channels, a RMB 0.2 rise per 60g*50 pack of dried mango, a RMB 3 increase per canned nut gift set, and a RMB 10 jump per premium pure-nut gift box.

Despite posting Q3 2025 revenue of RMB 2.281 billion, up 8.91% year-over-year, the company saw net profit attributable to shareholders plummet 56.79% to RMB 22.27 million. Core profitability metrics worsened further, with adjusted net profit crashing 83.45% to just RMB 6.31 million.

**Cost Pressures Drive Pricing Strategy** The snack maker cited sustained increases in global raw material costs, packaging expenses, and logistics as key reasons for the move, emphasizing the need to maintain product quality and supply chain sustainability. Distributors noted most affected products had been out of stock since Mid-Autumn Festival, with replenishment timed to coincide with the new pricing.

**Omnichannel Expansion Shows Results** While historically reliant on e-commerce (previously >90% of sales), Three Squirrels has aggressively pursued its "D+N" (short-video + omnichannel) transformation. Its offline distribution network now covers 2140 dealers (up from 1871 in 2024), with distribution revenue growing 40% YoY to RMB 938 million in H1 2025—accounting for 17% of total sales.

**Profitability Crisis Deepens** Year-to-date figures reveal alarming trends: - 9M revenue: RMB 7.759 billion (+8.22% YoY) - 9M net profit: RMB 161 million (-52.91% YoY) - Operating cash flow swung to negative RMB 506 million (vs. +RMB 31.8 million in 2024) - Sales expenses surged 24% to RMB 1.605 billion

**Investor Exodus** The stock has tumbled 36.23% YTD to RMB 23.32/share as of October 28. Institutional shifts include: - IDG Capital affiliate NICE GROWTH LIMITED cut holdings by 0.92 percentage points - Two National Social Security Fund portfolios exited top-10 shareholder lists

**HK IPO Preparations** After securing CSRC approval for a Hong Kong listing on September 30, the company replaced its auditor with Deloitte—a move seen as pre-IPO preparation. The proposed offering of 81.5 million shares aims to fund supply chain upgrades, retail expansion, and potential acquisitions. However, discrepancies between its HK prospectus and A-share filings—including 113-165% variances in reported sales volumes—have raised questions about disclosure consistency.

Three Squirrels maintains all disclosures comply with respective accounting standards (PRC GAAP and IFRS).