Events: 23Q1-Q3 achieved operating income of 4.43 billion yuan, +4.03% year-on-year; net profit of 360 million yuan, +28.16% year-on-year; net profit after deduction of 350 million yuan, +31.25% year-on-year. 23Q3 The company achieved operating income of 1.55 billion yuan, +6.56% year-on-year; net profit of 100 million yuan, +151.55%; net profit after deducting non-return net profit of 100 million yuan, +184.72% year-on-year.
Comment:
Q3 Revenue grew steadily, and the leading share was consolidated. The overall trend of steady growth in the 23Q3 category of kitchen and bathroom needs (smoke stove heat) continued. The total retail sales volume was 22.3 billion yuan, +3% year-on-year, and the company's revenue performance was superior to that of the industry. On the channel side, we expect the company's revenue growth from all channels in Q3 to maintain the H1 trend. Among them, online channels and offline channels may maintain a growth trend, while revenue from engineering and overseas channels may continue to decline year-on-year. On the product side, we expect 23Q3 smoke machine revenue to increase year on year and water heater revenue to decline year on year.
Cost optimization has achieved remarkable results, and impairment has dragged down apparent performance. The company's 2023Q3 gross margin was 42.6%, +2.55pcts over the previous year. We expect that it is mainly related to channel restructuring. The share of relatively low gross profit projects and overseas channels has declined markedly. On the cost side, the sales/management/development/development/finance expense ratio of 23Q3 company was 25.4%/4.9%/3.5%/-0.1%, respectively, compared to -4.0/+0.4/-1.6/+0.3 pct. The comprehensive cost rate was greatly optimized.
In addition, the company calculated asset impairment losses and credit impairment losses totaling about 43 million yuan in this quarter. We expect mainly impairment of receivables from real estate customers. Under the comprehensive influence, the company achieved a net profit margin of 6.4% in 23Q3, which was +3.7 pct over the previous year.
Investment suggestions: The company is paying more and more attention to brand image upgrading and channel management capabilities. Each channel continues to promote new competitiveness, and enhance the product matrix with new products such as integrated stoves and integrated cooking center tracks. We are optimistic that the company will refine internal skills in the process of rationalizing channels and strengthening governance, continue to explore growth potential in multiple categories and multi-brand matrices, and achieve better profits in the process of channel flattening, product high-end, and intelligent production. Net profit for 23-25 is expected to be 5.1/63/7.2 billion yuan (previous value: 4.8/5.7/670 million yuan, combined with a year-on-year increase of 2.6/3.7 pcts in Q3 gross margin/net profit margin, raising full-year profitability expectations), corresponding to 9.9x/8.0x/7.1x, maintaining the “buy” rating.
Risk warning: the risk of rising raw material prices; the risk of fluctuations in the real estate market; the risk of increased market competition; the risk that demand for new products falls short of expectations.