Event: the company released three quarterly reports, the first three quarters of 23 achieved operating income of 3.51 billion yuan, with a decrease of 6.6%; realized return net profit of 4 million yuan, up 113.7%; net interest rate of 0.1%, same increase of 1.0pct; realized deduction of non-return net profit of-20 million yuan, deduction of non-return net interest rate of-0.6%, and same increase of 1.5pct. In a single quarter, 23Q3 achieved an operating income of 1.44 billion yuan, a decrease of 0.9%; a net profit of 70 million yuan, a net interest rate of 4.7%, a decrease of 0.2%; and a non-return net profit of 60 million yuan, an increase of 23.0%.

The net profit increased in a single quarter, which was significantly better than that of last year.

In the first three quarters of 23, the company's comprehensive gross profit margin was 34.6%, with an increase of 0.1pct. The expense rate during the period is 34.3%, which is the same as minus 2.3pct. Among them, the sales / management / R & D / financial expense rate is 22.7%, 10.5%, 3.7%, 1.1%, respectively, a year-on-year change-2.3pct/+0.3pct/+0.45pct/-0.3pct. 23Q3's comprehensive gross profit margin is 35.2%, which is the same as minus 1.5pct. The rate of expenses during the period is 28.4%, which is the same as minus 3.7pct. Among them, the sales / management / R & D / financial expense rates are 18.7%, 5.6%, 3.6%, 0.5%, respectively, with a year-on-year change-3.6pct/-0.8pct/+1.1pct/-0.5pct.

Create a multi-product matrix and continuously optimize the channel layout. In 23 years, the company launched a new "random choice" whole house customization model, and iteratively innovated the new model based on the AIGC technology of multi-modal large model to create a multi-product matrix to meet the needs of users at different levels. At the same time, the company continues to increase market investment efforts, optimize the direct operation and join the channel layout, and vigorously expand bag-carrying, decoration companies and other multi-channel business cooperation. In the second half of the year, the company will step up efforts to attract investment, focusing on recruiting large businessmen and distributors, and continue to optimize the transfer of direct stores.

Profit forecast and rating: we expect the company's 23-and 24-year return net profit to be RMB 220 million, an increase of 371.6% and 44.8% over the same period last year. The current closing price corresponds to 16 and 11 times PE for 23 and 24 respectively. Give 23 years 22-24 times PE valuation, reasonable value range 24.28-26.48yuan, corresponding to 23 years PB1.3-1.4times, compared with comparable companies in a reasonable level, given a "better than the big city" rating.

Risk hint: the price of raw materials is higher than expected, and the channel expansion is not as expected.