Event: the company disclosed that its operating income in the first three quarters of 2023 was 2.228 billion yuan, up 14.26% from the same period last year; the net profit from its mother was 74.9705 million yuan, up 302.58% from the same period last year; and 54.8431 million yuan was deducted from non-net profit, an increase of 432.36% over the same period last year. The comments are as follows:

Thanks to the rapid growth of building ceramics, the performance of Q3 is higher than the same period last year. Q3 achieved an operating income of 863 million yuan, an increase of 20.95% over the same period last year, a net profit of 37.8035 million yuan, an increase of 1258.11% over the same period last year, and a non-net profit of 30.6245 million yuan, an increase of 2148.47% over the same period last year. The substantial increase in Q3 performance is mainly due to the increase in the performance of various business sectors and the increase in overall gross profit, as well as the increase in government subsidies received this year, long-term equity investment income and debt restructuring income calculated under the equity method. 1) the income of building ceramics and other materials increased by 28%, and the business of automobile interior decoration materials grew better. From the revenue side, according to our estimates, in the first three quarters, the revenue of building ceramics and other / home decoration materials / automobile interior decoration materials / film / artificial leather / fireproof panels was 11.82 pound 1.79pm 2.78pm 2.59pm respectively, with year-on-year changes of + 27.69max 1.62max 7.97max 7.97max 0.14max 14.58max 2.66% respectively. In terms of output, in the first three quarters, the output of home decoration materials / automobile interior decoration materials / film / artificial leather was 0.770.85, 2.83, 0.44 million tons, respectively, with a year-on-year change of + 14.67, 0.54, 20.10, 9.14%, and fireproof sheet production was 2.8378 million, down 12.68 percent from the same period last year. 2) the decline in raw material prices led to an increase in gross profit margin compared with the same period last year. The prices of most of the company's products declined in the first three quarters, among which the prices of home decoration materials / automobile interior decoration materials / film / artificial leather / fireproof panels changed respectively from the same period last year-8.19pm 2.03qqqlue 15.07qmax 6.06pm 4.66%. In terms of cost, the average price of resin powder / plasticizer, the company's main raw material, fell by 23.43% respectively in the first three quarters compared with the same period last year. Under the combined impact, the gross profit margin / net profit margin of the company was 22.98 peso 4.38%, respectively, an increase of 2.08/3.47pct over the same period last year. 3) the cash flow is good, and the expense rate decreases slightly. The net cash flow generated by the company's operating activities in the first three quarters was 202 million yuan, an increase of 59.31% over the same period last year. During the period, the expense rate was 17.25%, a decrease of 0.72pct compared with the same period last year. Among them, the sales / management (including R & D) / financial expense rates were 6.67, 9.10, 1.49%, respectively, down 0.01/0.61/0.09pct from the same period last year.

The channel sinks steadily, and the pan-home strategy opens up room for long-term growth. The company continues to sink channels and expands its national distribution stores through continuous investment and education. As of the first half of the year, Eagle has 1243 dealers and 1295 stores, with a store area of 300000 square meters. At the same time, the Eagle Brand Company also launched two kinds of stores: Eagle Life and Eagle Brand transformation, and implanted products such as wall panels, cabinets and floors into the terminal stores of the Eagle Brand Company, gradually realizing the integrated delivery of building ceramic products to indoor door and wall cabinets, providing customers with an one-stop solution for the systematic output of products, and launching the renovation of old houses and the deepening of hardcover housing business. Eagle brand company from a building materials brand into a consumer brand in the field of pan-home. In addition, the company focuses on the three main channels of home improvement retail, assembly and engineering, strengthens the sales transformation of home decoration retail channels, increases the stickiness of cooperation with assembly companies, and broadens the resources of individual engineering projects, so as to expand the coverage of the sales network. In the field of public clothing, the company entered the field of old medical reform through the acquisition of Tianhui Construction Department, tapping the development opportunities of the old medical reform market, and has gradually begun to undertake the construction and transformation of medical old reform projects. Mr. Wu Qichao, the controlling shareholder and actual controller of the company, subscribed all the A shares issued by the company to a specific object with cash, which is conducive to optimizing the capital structure of listed companies, reducing financial risks and improving the ability to resist risks. at the same time, it also shows the confidence of the actual controller in the future development of the company.

Investment advice: Q3 performance is eye-catching, pan-home layout for a long time for the credit, maintain the holding rating. It is estimated that the company's net profit from 2023 to 2025 will be 1.2,1.6 and 200 million yuan respectively, an increase of 173%, 35% and 22% respectively over the same period last year, corresponding to a price-to-earnings ratio of 18 times, 13 times and 11 times PE respectively. The downstream demand of the automobile decoration industry is improving; the company integrates Eagle brand, finishing materials and Tianan integration and other holding subsidiaries to create an integrated platform to create business coordination and create new growth points of performance.

Risk tips: raw material prices rise or exceed expectations; downstream demand of real estate may be lower than expected; prices of automobile interior decoration materials decline; industry competition intensifies; impairment meter mentions the risk of M & An integration, etc.