The 23Q3 income increased by 1.3%, and the net profit returned to the mother increased by 8.9%.

The company's 23Q1-3 revenue was 2.07 billion, up 4.5%. The revenue of 23Q1, Q2, Q3 and the year-on-year growth rate were 630 million (yoy+22.8%), 730 million (yoy-4.8%) and 720 million (yoy+1.3%), respectively. The net profit of 23Q1-3 was 310 million, which increased by 18.21%. The net profit of 23Q1, Q2, Q3 and the year-on-year growth rate were 79 million (yoy+44.65%), 120 million (yoy+13.45%) and 110 million (yoy+8.88%) respectively. 23Q1-3 deducted 290 million non-return, and increased 23Q1, Q2, Q3 net profit by 23.45%, and the year-on-year growth rate was 72 million (yoy+40%), 111 million (yoy+18.9%) and 107 million (yoy+18.7%), respectively.

23Q1-3 gross profit margin increased by 26.3% with 3.8pct increase, net profit rate by 14.9% with increase of 1.7pct23Q1-3 sales expense rate by 4.3%, and 0.9pct increase with increase in 0.9pct, mainly due to increased product promotion by the company; management expense rate (including R & D expense rate) was 6.6%, with an increase of 0.5pct; and financial expense rate was-2%, which was mainly due to the increase in interest income.

Broaden the product matrix and strengthen the construction of independent brands

The company's independent brand hopes that the baby will make great efforts to develop Douyin channels, especially develop "made in China" series of baby care products to be sold in Douyin channels, and promote sales through marketing, talent cooperation and other forms. The products have been recognized and praised by many consumers, and have been selected as "Douyin Super New Brand". At the same time, through the expansion of product categories, the company launched the Dafei brand, focused on personal care products, and carried out marketing promotion through all channels online. Among them, wet toilet paper products, in Tmall, Douyin & Kuaishou Technology, Xiao Hongshu and other channels to carry out the "large item strategy", from user access, arousing interest, building trust to the final transaction transformation, full-matrix full-link optimization; deepen talent cooperation and refined content operation, constantly highlight the brand setting, and form a benign high-frequency interaction with the target users.

The company's own brand sunnybaby has entered the major merchants in Thailand and carried out marketing activities at the same time.

Thailand's local market composite core structure diapers are still in the stage of consumer education. Through endorsements of local stars and online celebrities, the company relies on local media for publicity and promotion; the follow-up company plans to carry out various forms of promotion activities such as interaction with consumers, trial distribution and so on, so as to accelerate the cultivation and adjustment of production capacity layout by consumers and ensure the sustainable development of the business.

The company has established production bases in Hangzhou, Jiangsu, Thailand and Hubei. The production capacity of baby diapers, adult diapers and women's menstrual pants is in the forefront in China and has the advantage of large-scale production.

The construction of Hubei Haoyue plant has been completed, and the company will integrate the existing production line and adjust the capacity layout. Hubei Haoyue mainly produces baby diapers, women's menstrual pants, adult diapers and other products. Take advantage of the location advantage that Xiaonan District has a radius of 1000 kilometers covering 900 million people and that express delivery can reach consumers within 24 hours to further improve the distribution efficiency and at the same time expand the brand influence with the region as the center.

Adjust earnings forecast and maintain buy rating

The company continues to invest in the research and development of new products, focusing on baby care products and adult care products business, strengthen forward-looking cooperation with customers in the innovation stage, and continue to develop and optimize products. At the same time, the company continues to invest in the promotion of its own brand, strengthen brand building, expand marketing channels, promote product sales, enhance the company's product awareness and reputation, and increase market share. Taking into account the company's 23Q1-Q3 performance, 23Q1-3 return to the mother net profit of 310 million, accordingly adjust the profit forecast. We estimate that the parent net profit of 23-25 company is 5.1max 62max 750m (the previous value is 5.2max 650m), the annual EPS is 3.29max 400max 4.81 yuan per share, and the PE is 12Compact 10max 8x.

Risk tips: macroeconomic risk, market competition risk, raw material price fluctuation risk and so on.