Event: Sunrise Oriental releases its third quarterly report for 2023. In the first three quarters of 2023, the company realized 3.49 billion yuan in income, 170 million yuan in YoY+29%; 's net profit and 130 million yuan in YoY+1114%; 's non-return net profit, compared with a loss of 30 million yuan in the same period last year. 2023Q3 realized income of 1.43 billion yuan in a single quarter, YoY+49%; realized net profit of 80 million yuan, YoY+111%; realized non-return net profit of 60 million yuan, YoY+172%. The high growth of the company's heat pump business has led to the accelerated growth of Q3 revenue. The domestic market of heat pump this year is significantly faster than that of last year, and we believe that the heat pump business will further bring revenue and profit flexibility to the company.

Air can accelerate revenue growth: from a business point of view: 1) We estimate that Sunrise Oriental 2023Q3 air energy revenue accelerated growth of more than 50% year-on-year, which is the main driving force of the company's revenue growth. 2) with the recovery of domestic consumption since the beginning of this year, we estimate that 2023Q3's solar water heater income still grew slightly compared with last year, in which Xizang's business grew rapidly; 3) We believe that the company's kitchen and electricity business is affected by real estate policy changes or short-term pressure, but the overall operation is sound, or has achieved stable profits. 4) Photovoltaic and energy storage business is the company's second growth curve besides heat pump, and the business is still in the investment stage. With the emergence of the trend of integration of photovoltaic and thermal storage, we expect that the synergy between photovoltaic and energy storage and the company's heat pump business will be further reflected.

Q3 single-quarter profitability improved compared with the same period last year: Sunrise Oriental Q3 net interest rate compared with the same period last year + 1.6pct, the main reasons are: 1) the company realized cost reduction and potential increase, and the sales expense rate decreased significantly compared with the same period last year; 2) the company's revenue grew faster and the scale effect showed that the overall expense rate decreased compared with the same period last year.

Investment suggestion: Sunrise Oriental Air Energy business is developing rapidly, the proportion of air energy heat pump revenue is increasing, and the pulling effect of heat pump business on the company's revenue and profits will be further revealed. The company's photovoltaic and energy storage business makes full use of the customers and channels of the original photothermal business to form a synergy with heat pump products, which is expected to continue to promote the rapid growth of the company's revenue together with heat pump. We estimate that the EPS of the company in 2023-2024 will be 0.54 PE 0.67 yuan, and the target price for 6 months will be 7.02 yuan, corresponding to 13 times RMB2023, maintaining the investment rating of Buy-A.

Risk hint: raw material prices rise, subsidy policy is lower than expected