Event: the company's 2023Q1-Q3 income is 9.252 billion yuan, + 0.32% compared with the same period last year; the net profit returned to the mother is 225 million yuan, + 95.97% compared with the same period last year; and the non-return net profit is 121 million yuan, + 167.95% compared with the same period last year. The revenue of single Q3 company was 3.02 billion yuan, + 0.96% compared with the same period last year, the net profit of return to the mother was 10 million yuan, + 121.81% compared with the same period last year, and the net profit of non-return was-17 million yuan, + 78.78% compared with the same period last year.

Month-on-month improvement, supermarkets are still slightly under pressure from the same period last year. From a sub-format point of view, 2023 single Q3 company Buy 100 / supermarket format achieved sales of 6.379 billion yuan (+ 10.08%) / 2.288 billion yuan (- 2.20%) and revenue of 1.021 billion yuan (+ 10.31%) / 1.955 billion yuan (- 2.48%). The revenue growth of Q3 Buy 100 and supermarket was slightly better than that of H1, but the supermarket was still affected by the high base and CPI in the same period last year. According to the split of old stores and new stores, the revenue of Buy Bai comparable stores is + 10.28% year-on-year, and the total profit is + 111.08%; the revenue of supermarket comparable stores is-2.56%, and the total profit is-37.41% compared with the same period last year.

Q3 company opened a new supermarket and closed 2 supermarkets. By the end of the reporting period, the company had bought 100 99 supermarkets and 117 supermarkets, a net decrease of 3 and 2 respectively compared with the beginning of the year. At present, the store reserve project is sufficient, as of 2023Q3, the company has signed a total of 13 reserve projects to be opened.

The control of expense rate is stable and the profit margin has been improved. In the first three quarters of 2023, the company's gross profit margin was 37.49%, an increase of 1.14pct over the same period last year. The company's sales / management / finance / R & D expense rates were 31.29%, 3.04%, 0.70%, 1.53%, respectively, compared with the same period last year.-0.24/+0.05/-0.01/-0.61pct, the company's net profit rate was 2.42%, an increase of 0.91pct over the same period last year. 2023 the gross profit margin of Q3 company is 36.56%, which is 0.31pct higher than the same period last year. The sales / management / finance / R & D expense rate of the company is 33.51%, 3.69%, 0.45%, 2.94%, respectively, and the net profit rate of the company is 0.34%, which is an increase of 1.86pct.

Make efforts through all channels to adapt to changes in consumer demand. In terms of offline channels, the company paid close attention to the summer vacation from July to August and held the Tianhong "fun Festival". During the event, the passenger flow of the shopping mall increased by 28% compared with the same period last year. At the same time, the company continues to upgrade the experience of large stores, and continues to promote the breakthrough of the first store and the introduction of high-end goods. On the online side, online sales rose 1.6% in the third quarter compared with the same period last year, with supermarket home sales accounting for 22.3%. In the third quarter, the company's exposure on Douyin reached 351 million, up 116% over the same period last year. GMV achieved 110 million yuan in ticket sales, up 405% from the same period last year, and GMV2.59 billion yuan in Meituan.

Investment suggestion: the company is a traditional retail leader dominated by buying hundreds and supermarkets, continuously promoting the upgrading of business formats and the optimization of store content, strengthening the building of strategic core commodity groups, and the rapid development of online business brings the second growth curve. competitiveness continues to improve, its α is significant, profitability is expected to be repaired. We forecast that the net profit of homing from 2023 to 2025 will be 2.9 trillion yuan, corresponding to a PE of 21.5, 17.6 and 14.8 times, respectively, with a "overweight" rating.

Risk hints: the risk that the macro-economy is not as expected, the risk that the recovery of consumption will slow down; the risk that increased competition will lead to a decline in the company's market share and profitability; and the risk of the offline business model of channel change.