3Q23 performance is in line with our expectations

The company announced its results for the third quarter of 2023: 1-3Q23 realized revenue of 1.627 billion yuan, down 23.31% from the same period last year, and its net profit was 178 million yuan, down 53.2% from the same period last year, deducting 132 million yuan from non-parent net profit, down 33.06% from the same period last year, which is in line with market expectations. Excluding the impact of profit and loss and buyback profit and loss in the first half of 2022 in Qianchuan, Hubei Province, the revenue of 1-3Q23 company decreased by 9.09%, the return net profit decreased by 3.89%, and the non-return net profit decreased by 21.55%.

From a quarterly point of view, the company's 1Q/2Q/3Q23 realized revenue of 3.48%, 625%, 654 million yuan, respectively, compared with the same period last year,-43.47%, 19.95%, 9.83%, 0.12, 0.72, and 0.94 million, respectively, and-70.66%, 13.96%, 63.35% respectively.

Trend of development

1. The wardrobe business continues to adjust, and the Ambry business grows better. Excluding the influence of Hubei Qianchuan amalgamation table, 1-3Q23 sub-products, 1) overall wardrobe: income 1.212 billion yuan, same decrease 10.92%, gross profit margin increased 1.08ppt to 40.25%; 2) cabinet: income 202 million yuan, same increase 9.48%, gross profit margin decreased 0.70ppt to 27.94%; 3) wooden door: income 60 million yuan, same decrease 0.47%, gross profit margin increased 1.18ppt to 22.94% 4) finished product matching: income 72 million yuan, same minus 18.51%, gross profit margin also reduced 3.46ppt to 22.79% X 5) doors and windows: income 3 million yuan, same decrease 86.95%, gross profit margin increased 30.65ppt to 7.32%.

2. The gross profit margin continues to improve, and the expense rate has increased. The company's 1-3Q23 gross profit margin is 36.47%, year-on-year + 0.50ppt dint 3Q23 gross profit margin is 37.37%, year-on-year + 1.84ppt. From the cost side, the expense rate for the company's 1-3Q23 period is 26.31%, year-on-year + 4.64ppt, in which the sales / management + R & D / financial expense rate is 12.86%, 11.9% and 1.55%, respectively, and + 2.65ppt/+1.67ppt/+0.32ppt.

Under the comprehensive influence, the net interest rate of 1-3Q23 is 10.95%, and the net interest rate of 3Q23 is 14.31% compared with the same period of last year. The higher net interest rate of the same period last year is mainly due to the recognition of the investment income of Hubei Qianchuan.

3. Steady growth of bulk channels and pay attention to the recovery of retail channels. Excluding the impact of Hubei Qianchuan and table, 1-3Q23 sub-channel point of view, 1) Distribution: income of 1.374 billion yuan, down 13.65%, gross profit margin increased to 38.52%. 2) Direct marketing: the income was 53 million yuan, down 15.67%, and the gross profit margin was reduced by 0.56ppt to 54.30%. As of September 30, the company had a total of 1929 stores, including 1915 distribution stores, a net increase of 126compared with the beginning of the year, and 14 direct stores, a decrease of 14 compared with the beginning of the year. 3) bulk: the income was 122 million yuan, which increased by 101.33%, and the gross profit margin decreased by 2.61ppt to 13.62%.

Profit forecast and valuation

Taking into account the lower-than-expected recovery of terminal passenger flow and the intensification of competition in the industry, the net profit of return to home was reduced by 18%, 14%, to RMB 259, 314 million, respectively, and the current stock price corresponds to 12 times of Pmax E in 24 years, respectively. Maintain the outperform industry rating, and lower the target price by 8% to 12 yuan, corresponding to 14 times the 24-year price of 23max, which is 12 times Pmax E, which has 16% upside compared to the current stock price.

Risk

The property boom is declining more than expected, competition aggravates risks and raw materials fluctuate sharply.