Events: 1) 2023Q1-Q3, the company achieved operating income of 609 million yuan/year over year +24.23%, net profit of 42 million yuan/year on year, narrowing of net profit of non-return net profit - 56 million yuan/year on year loss; 2) 2023Q3, the company achieved operating income of 226 million yuan/year on year +76.57% /year on year +17.63%, net profit of 0.04 million yuan/year on year loss narrow/month over month, reduced net profit of 0.03 million yuan/year on year Narrow down.

Revenue gradually recovered, and period expenses were better controlled. 1) Sales situation: 2023Q3 achieved revenue of 226 million yuan, +76.57% year-on-year and +17.63% month-on-month. 2) Gross profit margin: 2023Q3, the company achieved a gross profit margin of 16.95%, year-on-year +30.85pct, +2.89pct, 3) period rate: 2023Q3, ① management fee rate is 18.68%, -19.65pct, y-3.26pct, or mainly due to the company's optimization of personnel management systems, integration of business layout, and reduction of operating costs; ② Sales rate is 1.04%, y-1.02pct, month-on-month, and -0.17pct; ③ Financial rate is 1.91%, y-0.66pct, month-on-month- 0.53pct 4) Net profit margin: 2023Q3 achieved a net profit margin of 1.80%, +52.97pct year-on-year and +9.32pct month-on-month, mainly due to increased transportation profits and cancellation of policy rent relief, resulting in increased property rental profits.

Duty-free sales of sea travel have continued to rise, and quality products have been introduced in an optimized structure. From January to September 2023, tax exemption for sea travel achieved revenue of 3,012 billion yuan, net profit of 137 million yuan, net profit margin of 4.56%, of which tax-free revenue was 2,796 billion yuan. The company adopted a differentiated strategy, and nearly 250 brands entered the outlying islands duty-free market for the first time or exclusively. Duty-free sea travel continues to optimize the brand structure, increase the proportion of boutique products, and establish direct procurement relationships with 737 brands.

The duty-free layout is improving day by day, boosting performance growth after injection. 1) The revised transaction report for the company's acquisition of tax exemption in October of this year has been approved by the Hainan Provincial State Assets Administration Commission, and completed responses to the second round of inquiries from the Shanghai Stock Exchange; 2) Sea Travel Duty Free introduced a number of boutique brands in the second half of this year, combined with the tightening of member rights. It is expected that with the arrival of the peak season in the fourth quarter, the company will achieve a double increase in revenue and gross margin; 3) Olai's business project has been successfully promoted, complementing the advantages of the Sea Travel Duty Free City, promoting the dual drive of “outlying islands tax exemption+tax exemption”.

Profit forecast and rating: Haiqi Group is expected to consolidate resources after merging the tax exemption for sea travel, and the company's revenue and profit are expected to grow rapidly. Without considering tax exemptions for sea travel, we expect Haiqi Group's net profit from 2023-2025 to reach -0.52, -0.18, and -0.02 billion yuan, and EPS of -0.17, -0.06, and -0.01 yuan respectively, maintaining the “increased holdings” rating.

Risk warning: policy risk, systemic risk, increased market competition, acquisition falling short of expectations, approval risk, etc.