The decline in demand combined with channel adjustments put pressure on Q3 revenue. Optimistic that integrated cooking centers will open up growth space, the company Q1-3 achieved revenue of 620 million yuan (-12.1%), net profit of 140 million yuan (-8.3%), net profit of 140 million yuan (-8.3%), and deducted non-net profit of 120 million yuan (-9.7%). Q3 alone achieved revenue of 170 million yuan (-32.5%), net profit of 0.3 million yuan+ (-47.2%), net profit of 0.3 billion yuan+ (-47.2%), and net profit of 0.2 billion yuan (-52.7%) after deducting non-net profit of 0.2 billion yuan (-52.7%). Performance is under pressure due to weak demand. We have lowered our profit forecast. We expect net profit for 2023-2025 to be 1.9/21/230 million yuan (the original value in 2023-2025 was 2.3/2.7/3.1 billion yuan), corresponding to EPS of 1.03/1.15/1.27 yuan, and the current stock price corresponding to PE is 15.1/13.5/12.2 times. The company launched a new category of integrated cooking centers, and is optimistic about the recovery in Q4 revenue growth and maintaining the “buy” rating.
The launch of the integrated cooking center category expands the new market for used kitchen transformation, and is optimistic about channel expansion to build a larger market for used kitchen transformation. The launch of the new integrated cooking center category is expected to open up space for the company to grow. According to Aowei Cloud Network (AVC) data, in the first half of 2023, retail sales in the online market of integrated cooking centers and stoves increased by 286.4% year on year, and the offline market increased by 87.8% year on year. On October 7, the company released four new integrated cooking center products in three series: H1 Family, G3 Love, and Z6 Dream. The Shuaifeng Integrated Cooking Center revolves around integrating “dynamic” food, integrating “fresh” food, and integrating “full” food, achieving three major integration breakthroughs in functional integration, space integration, and intelligent integration. Channel-side companies have a lot of room for improvement in the number and quality of dealers. They are optimistic that new channels and categories will continue to build performance growth points, and the market share side will usher in opportunities to increase.
Cost reduction and efficiency drive the increase in Q3 gross margin. Optimistic about improving the Q4 profit margin after revenue recovery, the Q3 company's gross margin is 47.5% (+0.9pct), mainly driven by cost reduction and efficiency, and the period expense ratio is 32.6% (+9.3pct). Among them, the sales/management/R&D/financial expenses ratio was 20.5%/10.0%/7.1%/-5.1%, respectively, +3.9/+3.8/+3.8/3.7/-2.1pct. Expenses were not sufficiently diluted after falling revenue, and sales expenses increased to accelerate market expansion, reflecting the company's determination to expand the market. synthesis Under the influence, the net profit rate was 15.1% (-4.2pct), and the non-net profit rate was 12.1% (-5.1pct). The contract debt at the end of 2023Q3 was $17 million (-49.5%), which is in a painful period of channel adjustment. We expect the company's revenue growth rate to resume after the channel adjustment period ends, and we are optimistic that the profitability side of Q4 will recover.
Risk warning: risk of falling demand; risk of raw material prices; new product sales falling short of expectations.