As a result of the slowdown in engineering channels, Q3 revenue fell slightly short of expectations. The trend of accelerated expansion of new categories improved. Q1-3 achieved revenue of 7.93 billion yuan (+9.6%), net profit of 1.37 billion yuan (+11.3%), net profit of 1.37 billion yuan (+11.3%), and deducted non-net profit of 1.28 billion yuan (+13.3%). Q3 achieved revenue of 3.0 billion yuan (+7.4%), net profit of 540 million yuan+ (6.5%), net profit of 540 million yuan (+8.1%) after deducting non-net profit of 540 million yuan (+8.1%). Q3 revenue was slightly lower than expected under pressure from demand, so we are optimistic about revenue recovery under the low Q4 base. We have lowered our profit forecast. It is estimated that the net profit for 2023-2025 will be 18.9/20.6/2.28 billion yuan (original value was 20.1/22.4/2.45 billion yuan), corresponding to EPS of 2.0/2.2/2.4 yuan, and the current stock price corresponding to PE is 11.6/10.7/9.7 times. The trend of new product expansion is improving, and the “buy” rating will remain unchanged.
The market share of core categories is stable, new categories accelerate expansion, and the second growth curve (1) The market share of core categories is stable: according to AVC, 2023Q3 owner/industry range hood online channel sales were +10.9%/-0.3% year on year, and gas stoves were +17.4%/-1.6% year on year respectively. Under the overall decline in the industry, the company bucked the trend, and the retail market share of range hoods/gas stoves reached 22.9%/22.9% respectively, continuing to lead.
Looking at offline channels, the market share of the company's 2023Q1-3 range hoods/gas stoves in retail sales reached 30.4%/29.9%, respectively. The market share of advantageous channels is stable, with brands accounting for 31.9% in the decoration market, ranking first. The company has significant advantages in terms of core categories and basic markets. (2) Continued breakthroughs in new product share: According to AVC, the market share of the offline retail sales of the integrated stove/dishwasher/built-in steamer of 2023Q1-3 reached 28.9%/16.7%/29.5% respectively, ranking first/top three/first in the industry respectively. The company achieved remarkable results in expanding new categories, and its market share rose rapidly.
Q3 Deducting non-net interest rates continued to rise. The risk of bad debts was limited, and the profit margin side remained stable 2023Q3. The company's gross margin was 52.2% (-0.1pct), and the period expense ratio was 32.4% (+1.1pct), of which the sales/management/R&D/financial expense ratio was 26.0%/4.1%/3.6%/-1.2%, respectively, and -0.2/+1.0pct, respectively. Under the overall influence, net interest rate was 18.0% (-0.3pct), and Q3 credit and asset impairment losses recovered 0.12. 100 million (up $12 million year on year), credit impairment losses rushed back to $19 million (up $0.4 million year on year), net profit margin reduced by 17.9% (+0.1 pct). The impact of bad debts is expected to be limited under full risk, so it is optimistic that profit margins will remain stable.
Risk warning: risk of falling demand; risk of raw material prices; new product sales falling short of expectations.