Event: the company disclosed that the company reported in the third quarter of 2021 that its operating income in the first three quarters was 3.501 billion yuan, an increase of 30.52% over the same period last year, and its net profit was 301 million yuan, an increase of 15.52% over the same period last year. The comments are as follows:

In the first three quarters, the company's revenue increased by 30.52% to 3.501 billion yuan, and its net profit increased by 15.52% to 301 million yuan. Among them, in the third quarter of 2021, the company's operating income reached 1.207 billion yuan, an increase of 13.99% over the same period last year; the net profit belonging to shareholders of listed companies was 100 million yuan, an increase of 6.53% over the same period last year. 1) the demand for orders for products such as kitchen, sanitation and water purification rebounded, and revenue increased by 30.52% as a result of the rebound from a low base in the previous period. The turnover of the company's kitchen, bathroom and water purification product lines increased in the first three quarters, and the demand for export orders rebounded, and the lower turnover affected by the epidemic in the same period last year kept a good growth in revenue. 2) the increase in the price of raw materials leads to the decline of gross profit margin, and the growth rate of net profit is lower than that of income. The company's consolidated gross profit margin fell 6 percentage points to 23.44% in the first three quarters from a year earlier, and its net profit margin fell 1.12 percentage points to 8.61% in the first three quarters compared with the same period a year earlier. 3) the increase in procurement results in a decrease in net cash flow. The net cash flow generated by the company's operating activities in the first three quarters decreased by 38.50% compared with the same period last year, mainly due to the fact that the increase in procurement expenditure exceeded the increase in sales rebates.

The company's repurchase of shares not exceeding RMB 20 million and not less than RMB 10 million is intended to be used for the implementation of the employee stock ownership plan, which is conducive to the realization of the company's long-term business objectives. On October 13, the company issued a buyback report on share buybacks through centralized bidding transactions. According to the report, on September 28, 2021, the company examined and passed the "proposal on share buyback by centralized bidding transaction." The total amount of funds to be repurchased this time shall not exceed RMB 20 million yuan and not less than RMB 10 million yuan. The price of the repurchased shares of the company is no more than RMB 18 per share. The repurchase period shall not exceed 12 months from the date of consideration and approval of the repurchase plan by the company's board of directors. The repurchased shares are intended to be used to implement the employee stock ownership plan, which will fully mobilize the enthusiasm of the company's management team, effectively combine the company's interests with the personal interests of the core team, and ensure the realization of the company's long-term business goals.

Focus on real estate fine decoration of the track, promote the development of real estate and engineering channels to speed up. In the country adhere to the "housing speculation" positioning, hardcover housing policy continues to promote, collection market space to expand. Taking this as an opportunity for development, Shanghai Jianlin Smart Home Technology Co., Ltd. was established in February 2021, mainly oriented to the Chinese real estate sector, through the direct supply model, customized products and services with high performance-to-price ratio, to ensure quality advantages for customers and enhance price competitiveness. The company around the healthy home layout, the formation of kitchen and bathroom, water purification, fresh air, care and other industries, to provide one-stop overall home solutions. At present, the company has made breakthroughs in cooperation with Jindi, Cosco, Country Garden Holdings and other well-known head real estate developers, and will do more planning and planning on the real estate fine decoration track to further promote the expansion and acceleration of real estate and engineering channels.

"Technology + health + brand" three-wheel drive to determine the company's new development strategy. 1) Technology-driven: based on technology-driven development, promote digital development in an all-round way. The company continues to increase R & D investment, especially in filter materials, surface treatment, materials, intelligent equipment, intelligent electronic control and other basic technologies, continue to carry out product innovation and efficiency improvement, and build a comprehensive and healthy home industry ecology. to build a solid foundation for technological leadership. 2) Health-driven: the health industry takes advantage of the wind to accelerate the layout of the health care industry. In recent years, the company has continued to promote the development of the health care industry, with a relatively deep industry background, continuous technological innovation and breakthroughs. With the gradual deepening of relevant national policy support, there is a broad space for the development of the industry. In 2021, we will carry out home health care project cooperation with Xiamen University, upgrade the design concept of health care products by opening up industry-university-research cooperation channels, and actively participate in the formulation of product standards for the elderly, so as to meet the market demand for healthy and active old-age care. 3) Brand drive: promote the upgrading of commercial brand strategy. The company continues to promote the common development of industrial brands and commercial brands, expand the scope of business and customer groups, and become a first-class enterprise with large-scale high-end precision manufacturing capabilities. Through strategic positioning, brand upgrading, product integration and business model innovation, the company further accelerates the resource integration and comprehensive upgrading of its commercial brands-"Water Merlot" (Water purification Brand) and "Erik" (Xinfeng Brand).

Investment advice: maintain the overweight rating. It is estimated that the company's net profit from 2021 to 2023 will reach 4.0,4.8 and 590 million yuan respectively, an increase of 10%, 20% and 21% over the same period last year, corresponding to 15, 13 and 11 times the valuation of PE. The company focuses on and deeply ploughs the big health industry to build "healthy family life", "commercial engineering" and "intelligent customization".

And other diversified development patterns. To "technology-driven, healthy development, brand precision" three-wheel drive as the development strategy, fund-raising projects to release capacity increment space.

Risk hints: intensified competition in the industry; raw material price fluctuation risk; downstream demand downturn risk; market demand lower than expected risk; real estate regulation risk; growth risk after fund-raising project is put into production