Overview of events

In the first three quarters, the Company's revenue/net profit attributable to parent/net profit deducted from non-parent/net operating cash flow were RMB 9.3/0.46/0.35/62 million respectively, with a year-on-year increase of 24.32%/306.36%/251.09%/143.06%. The net profit deducted from non-parent was lower than net profit attributable to parent mainly due to government subsidies and investment income, and the increase in operating cash flow was mainly due to the increase in sales returns. 23Q3 Company income/net profit attributable to parent/net profit deducted from non-parent were 3.75/24/22 million yuan respectively, with a year-on-year growth of 32.16%/354.18%/266.41%.

The company announced that it intends to transfer 47.83% equity of Pathfinder Ice and Snow to Mr. Wu Bin at a price of RMB 11 million. After the transaction is completed, the company no longer holds shares in Pathfinder Ice and Snow.

Analysis and judgment:

Q3 revenue growth continued to increase. Our analysis shows that revenue growth is mainly due to the recovery of the company's outdoor business and the growth of G2 chip business.

The increase in net interest rate was mainly due to the decrease in selling expense ratio. 23Q3 gross profit margin/net profit margin was 42.58%/7.15%, up 1.48/12.54PCT year-on-year; Q3 sales/management/R & D/financial expense ratio was 20.93%/10.99%/5.49%/-2.14%, down 10.29/0.59/-0.22/1.52PCT year-on-year respectively. The decrease in finance costs was mainly due to the increase in interest income and exchange gains and losses. Other income and net investment income/income decreased by 0.86PCT year-on-year.

The turnover days of accounts receivable decreased. 23Q3 accounts receivable/inventory/accounts payable amount was 4.08/4.11/2.56 million yuan respectively, down 27.01%/-0.24%/0.40% year-on-year, accounts receivable/inventory/accounts payable turnover days were 113/217/143 days respectively, down 77/-2/-7 days year-on-year.

Investment suggestion

According to our analysis,(1) the growth momentum of the main business of the Company is relatively good. On the one hand, the proportion of joint venture mode is increased to improve profit elasticity; on the other hand, after hiring new spokesperson Liu Haoran last year, the brand power of the Company is improved, and at the same time, we judge that the store effect driven by the 9th generation store is expected to improve; From the perspective of the company's brand strategy, the main idea lies in creating a product line image suitable for use in different environments and meeting different demands through high-tech enabling products, so as to improve product functionality. (2) From the perspective of chip business, the acquisition of G2 Touch is relatively successful, mainly benefiting from technology development and downstream customer development.

Maintain 23-25 year revenue forecast of 13.46/15.65/18.08 billion yuan, maintain 23-25 year net profit forecast of 1.22/1.63/1.94 million yuan, corresponding to EPS 0.14/0.18/0.22 yuan, closing price of 7.53 yuan on October 27,2023 corresponding to 23/24/25 years PE of 54/41/34X respectively, maintain "buy" rating.

Risk hint

The progress of opening the store is not as expected, the performance uncertainty of the acquisition target, the sustainability of camping, systemic risk.