Event: The company released its 2023 three-quarter report. 2023Q1-Q3 achieved operating income of 3.444 billion yuan/year on year +13.42%, net profit of 450 million yuan/year on year - 317.39%, net profit after deducting net profit of 469 million yuan/year on year -345.17%.

Revenue decelerated month-on-month, gross margin increased slightly month-on-month, and performance was generally in line with expectations. During the reporting period, part of the reporting period was affected by the base figure. In the third quarter, the company achieved operating income of 1,181 billion yuan/year on year -4.39% (the year-on-year growth rate of 2023Q1-Q2 revenue was 37.2%/16.3%, respectively); the 2023Q3 gross profit margin was 3.6%, which still declined sharply year on year, or due to changes in revenue structure and rising labor costs, but +5.0 pct to 3.6% month-on-month; the cost side remained stable; the cost side remained stable, and the company's sales expense rate/ management cost rate/ R&D expense rate/ financial expense ratio 2023Q3 3.9%/11.8%/1.6%/0.8%, respectively. Furthermore, since the repayment of accounts receivable fell short of expectations, the company confirmed a credit impairment loss of -90.38 million; overall, the company achieved net profit of 242 million yuan/year on year -351.86% in 2023Q3 and net profit after deducting non-return net profit of 242 million yuan/year on year -374.71%, and the performance was basically in line with expectations.

Expand the live streaming sector of local life, gradually implement it, and actively deploy AI. As the leading MCN in the domestic live e-commerce industry, since 2023:1) Q2 has pioneered the local lifestyle business layout, and the number of sessions has also been skewed. Yang Zi and Huang Shengyi's Disney special GMV during the 618 period exceeded 152 million, and Wuling Auto's special GMV in July broke 120 million, all of which performed well; 2) Hangzhou, Wenzhou and other places have also continued to implement the long-range apparel industry chain. It is expected to expand growth by the end of the year; 3) Actively deploying AI to promote the construction of AIOS Live streaming is intelligent, and The active deployment of AI in various areas, such as virtual digital people and product graphics generation, has achieved certain results.

Investment suggestion: As the leading MCN in the domestic live e-commerce industry, the company has achieved coverage of three major platforms, has strong supply chain resources and anchor matrices, and will continue to be deeply cultivated in the future. Referring to 2023Q1-Q3 company operating indicators, we lowered the company's net profit from 2023-2025 to -521 million/69 million/272 million, maintaining the “increased holdings” rating.

Risk warning: Stricter industry regulation risks; increased competition risks; macroeconomic risks.