Event: Qumei Home released its third quarterly report in 2022. 2022Q1-3 achieved revenue of 3.75 billion yuan, an increase of 0.21% over the same period last year; net profit of 160 million yuan, down 11.62%; and net profit of 124 million yuan, down 24.01% from the same period last year. Among them, the operating income of 2022Q3 in the single quarter was 1.214 billion yuan, down 1.29% from the same period last year; the net profit was 35 million yuan, down 34.45% from the same period last year; and the net profit after deducting non-return was 36 million yuan, down 21.72% from the same period last year.

The domestic "channel + product" has been actively adjusted, and the overseas business performance of 2022Q1-3 is excellent. Under the influence of the impact of the epidemic in the domestic market and the weakening of overseas consumer demand caused by the increase in interest rates by the US dollar, on the one hand, the company reasonably increases the prices of the original products to hedge against the adverse effects of rising raw materials and freight costs to a certain extent; on the other hand, it continues to accelerate the development of innovative business, making a positive contribution to the overall business income.

In terms of domestic business, 1) Channel expansion: the company continues to promote the "three new marketing" in the dealer channel.

In the construction of the system, new businessmen and small businesses are encouraged to take the initiative to simplify their business models, starting with a single category, so as to improve their survival rate and profitability; big and strong businessmen give full play to the advantages of the business model of "full category one-stop". Improve guest list value and joint rate. In terms of the pace of store expansion, the company actively looked for high-quality store locations during the epidemic and expanded its channels against the trend. 2) Product optimization: the company actively promotes new product research and development, and regularizes SKU streamlining work to improve production efficiency.

In terms of overseas business, the sales of various categories of Ekornes have maintained a good growth momentum: comfort chair products continue to bring forth new ideas, and same-store sales grow steadily; soft sofas, electric chairs, soft-bag dining chairs and other products are sold rapidly, and the channel penetration continues to increase; mattress products from 2022Q2, starting from the European market, expand to the global market, which is expected to contribute new increments.

Profitability is under short-term pressure, and cost control has achieved remarkable results

In terms of profitability, the gross profit margin of 2022Q1-3 was 34.26%, down 7.73% from the same period last year. 22Q3 gross profit margin was 34.30%, down 8.98pct from the same period last year.

In terms of period expenses, the period expense rate of 2022Q1-3 company is 29.38%, which is lower than that of the same period last year (5.96pct). The sales / management / R & D / financial expense rates are 16.81%, 7.67%, 1.98%, 2.92%, respectively-5.90/+0.98/+0.04/-1.08pct.

During the single quarter of 22Q3, the expense rate was 29.27%, a decrease of 7.24pct compared with the same period last year, and the sales / management / R & D / financial expense rate was 17.91%, 7.71%, 2.04% and 1.60%, respectively, and-5.94/+1.03/+0.08/-2.41pct, respectively.

Under the combined influence, the net interest rate of 22Q1-3 is 4.29%, which is 1.03% lower than the same period last year. The net interest rate of 22Q3 company is 2.86%, which is down 1.69pct from the same period last year.

Investment advice: Qumei home home business at home and abroad coordinated efforts, the start of 2022 high performance, fundamentals to maintain a rebound. At the same time, the company introduces the head war investment Hillhouse and so on, to further enable the long-term development. We estimate that the operating income of Qumei Home from 2022 to 2024 will be 52.12,58.42,6.824 billion yuan, up 2.74%, 12.09% and 16.81% over the same period last year, and the net profit will be 2.21,4.75 and 596 million yuan respectively, up 24.29%, 114.87% and 25.46% over the same period last year, corresponding to PE 16.5x, 7.7x and 6.1x, maintaining the investment rating of Buy-A.

Risk hint: industry competition aggravates the risk; the risk of rising raw material prices; the risk of continuous tension in shipping.