Event: the company publishes its 2023 semi-annual report. 2023H1 achieved revenue of 921 million yuan, year-on-year-29.93%, net profit of-51 million yuan, year-on-year-131.82%, non-return net profit of-82 million yuan, year-on-year-154.58%. Among them, 2023Q2 achieved revenue of 473 million yuan, month-on-month comparison of-32.69% take-off 5.49%, net profit of-21 million yuan, year-on-year-124.55%, non-net profit of-37 million yuan, year-on-year-146.62% TX 23Q2 sales gross profit of 36.61%, month-on-month comparison of-9.18 color 5.08pcts; sales net profit of-4.52%, month-on-month comparison-16.91/+2.10pcts.

Downstream destocking superimposed competition aggravates the drag on performance, and the expense front leads to periodic losses. 23H1 overseas high inflation superimposed by global central banks continue to raise interest rates to curb consumption, overseas retail wholesalers gradually turn to the active destocking stage. In addition, Amazon.Com Inc and other platforms intensified competition, the company in order to maintain its share and inventory, take the initiative to increase discount promotion performance is weak. The company increases the investment in marketing promotion, new market development, strengthening the construction of localization team and official website operation team, and sales managers reserve in advance to increase expenses, which leads to phased losses in the first half of the year. We believe that at present, the channel inventory in Japan, the United States and China has returned to normal, and the second half of the year has gradually entered the peak sales season, the superposition company continues to promote cost reduction and efficiency, and the company's performance is expected to return to the growth track.

The continuous expansion of offline channels contributes to the high growth of business and the improvement of profitability. 23H1's offline retail channel revenue accounts for 32.69%, compared with the same period last year + 7.57pcts, and has entered more than 6000 global well-known retail stores. We expect the number to exceed 10,000 by the end of 2023 and 20,000 by the end of 24th. The company's 23H1 offline channel sales products are mainly below 1 kilowatt-hour of electricity, and the offline layout of new products with large capacity, high unit price and high profitability will be increased in the second half of the year, and the proportion of offline revenue is expected to increase significantly. With the volume of offline channels, we expect the company's profits to continue to improve.

Investment suggestion: considering the continued expansion of the company's offline channels, we expect the company to achieve a net profit of 1.91 million yuan in 2023-2025, compared with-33.4%, 117.7% and 75.0%, corresponding to an EPS of 1.53, 3.33 and 5.83 yuan, maintaining a "buy" rating.

Risk tips: downstream demand is lower than expected; channel expansion is not as expected; industry competition is intensified.