The company released 23 quarterly reports, revenue and profits are in line with expectations. 23Q1-3 revenue 1.92 billion yuan (year-on-year-2.9%), home net profit 346 million yuan (year-on-year + 5.7%), deducting non-home net profit 307 million yuan (year-on-year + 5.9%), profits in the first three quarters reached an all-time high! Of this total, 23Q3's revenue was 650 million yuan (year-on-year + 0.9%), return-to-home net profit was 127 million yuan (year-on-year + 9.2%), and non-return net profit was 113 million yuan (year-on-year + 15.5%). From a marginal point of view, 23Q1/Q2/Q3 's single-quarter revenue is-7.6% compared with the same period last year, and the trend of steady improvement quarter by quarter is good.

Home textile brand competition pattern is excellent, superimposed Fu Anna strong brand strength to lead, gross profit margin continues to rise. The company firmly lives in the first echelon of home textile and is the only one in the industry to be selected as China's "60-year brand". It is continuously enhancing the brand premium by virtue of original design and high-end positioning. The gross profit margin of 23Q1-3 has steadily increased by 1.4pct to 54.6%, of which 23Q3 gross profit margin has increased to 55.4% compared with the same period last year, which is basically synchronized with the rising trend of the first gradient home textile brands such as Luolai, reflecting the excellent competition pattern of the first echelon brands in the home textile industry. Consumers' recognition of brand premium is increasing day by day.

At the same time, the company's ability to control fees is particularly prominent, and finally high gross profit can be effectively transformed into high net profit. According to the company's three quarterly reports, the expense rate during 23Q1-3 was 33.7% (year-on-0.4pct), of which the expense rate during 23Q3 was 32.8% (year-on-1.9pct). Itemized, only the sales expense rate slightly increased from 0.2pct to 25.6% year-on-year, while the remaining management / R & D / financial expense rates were 4.3%, 3.3%, 0.4% and 0.4%, respectively, and decreased compared with the same period last year. Finally, it led to a net interest rate of 19.5% per quarter, a big increase in 1.5pct over the same period last year, approaching the level of 20% net interest rate.

According to the company's three quarterly reports, the company disclosed sub-channel sales: 1) online: 23Q3 e-commerce revenue of 229 million yuan, down 2.9% from the same period last year, but has improved from the 6.0% decline of 23H1. The company's online channel development takes into account both share and profit, we expect the e-commerce channel net interest rate and the comprehensive net interest rate level is not much different. 2) offline: 23Q3's direct revenue is 145 million yuan, an increase of 2.1% over the same period last year, and franchise revenue is 195 million yuan, an increase of 0.8% over the same period last year, both of which have reversed the decline of 23H1 compared with the same period last year, but overall, franchisees are still relatively cautious in picking up goods, and the subsequent restoration of confidence in franchise channels will be interesting. 3) other: the revenue of 23Q3 group buying and home business is 84 million yuan, an increase of 10.5% over the same period last year, and the growth rate is higher than its own overall level.

TOC business advantages + excellent inventory indicators, reflecting better than the operating capacity of their peers. According to the company's three-quarter report, 23Q1-3's TOC business (direct marketing + e-commerce) accounts for 63% of revenue, and its product series are updated and superimposed in design and innovation every quarter, which requires a strong level of inventory management compared with peer companies with a high proportion of popular products and franchise channels. By the end of 23Q3, the company's inventory was 790 million yuan (year-on-year-10.9%) and inventory turnover days were 239.2 days (year-on-year).

High-end artists spin national brands, excellent asset quality, outstanding resilience to adversity, and maintain a "buy" rating. Since the company went public, the cumulative dividend rate has been as high as 51.2%, especially in the recent 21-22 years, the cash share has exceeded 90%. As of the end of the 23Q3 period, the company's monetary funds and transactional financial assets reached 1.41 billion yuan (+ 12.2% compared with the same period last year), laying a solid condition for the continuity of the high dividend policy. To maintain the profit forecast, the estimated 23-25 net profit is 5.9 million yuan, corresponding to the PE of 12-11-10, maintaining the "buy" rating.

Risk Tip: the company recently received a "warning letter" from Shenzhen Securities Regulatory Bureau and a "concern letter" from Shenzhen Stock Exchange.