[Incident_case: mmgoshiri] Announcing the results of the 2023 three-quarter report. In the first three quarters of 2023, the company achieved revenue of 731 million yuan, -6.71% year-on-year, net profit of 104 million yuan, -24.56% year-on-year, minus 102 million yuan, a year-on-year increase of -21.58%. In the single quarter of 2023Q3, the company's revenue was 301 million yuan, up 27.51% year on year, and 23.90% over Q2. Net profit for the mother was 38,4832 million yuan, +6.52% over the same period, and after deducting the non-return mother's net profit of 37.411,900 yuan, +27.23% over the same period last year.

Strengthen our own brand building and look forward to recovery in overseas markets. The company continues to promote its own brand building. Currently, it has its own brands such as “PikaPoof”, which focuses on cat products, and “Couffey Kangfei,” which focuses on functional dog training products. The company has increased the intensity of product development and broadened sales channels. Domestic sales growth is expected to be good in 2023Q1-Q3. Affected by the economic downturn in major overseas markets such as the US and Europe and slump in consumption, overseas business is expected to be affected to a certain extent. As overseas customers complete the removal of warehouses, overseas markets are expected to gradually recover next year.

Profitability is under pressure in the short term, and marketing expenses are increasing. 23 The company's gross margin/net profit margin for the first three quarters was 22.40%/16.16%, year-on-year -1.72/ 3.12pcts. The gross margin/net margin for the Q3 quarter was 22.77%/14.39%, +2.69/ -2.57pcts compared to 2022, and +1.87/ -7.06pcts in the Q2 quarter. High gross profit led to a decline in revenue from equipment products, and an increase in the share of revenue from low-margin rubber products put pressure on the company's profitability in the short term. In terms of cost rates, sales/management/R&D/finance rates were 2.33% /3.46/% /1.95% /- 3.91%, respectively, with year-on-year changes of 0.87pcts/0.20pcts/- 0.17pcts/0.49pcts. The company increased marketing investment, and the sales expense ratio increased significantly; the revenue generated by exchange rate fluctuations decreased compared to the same period last year, leading to a year-on-year increase in the financial expense ratio.

New production capacity is about to be released, and the company plans to integrate the supply chain. The company's plant of about 70,000 square meters of fund-raising projects in Wenzhou is expected to be put into use early next year. Normal operation after production is put into operation can increase 25 million traction equipment and 3,000 tons of pet food production. The company's pet food production base in Cambodia is basically at full production this year, and plans to expand the new plant. At the same time, the company plans to expand to the raw materials side and prepare new overseas production bases to integrate the supply chain and promote cost reduction and efficiency.

Investment advice: The share of the domestic market is expanding, independent brands are gradually being expanded, and the US market is expected to recover next year. It is estimated that the company's EPS for 23-25 will be 0.76/0.87/1.02 yuan, corresponding PE will be 20/17/15 times, maintaining the “increase in holdings” rating.

Risk warning: The exchange rate fluctuated more than expected; the recovery of overseas markets fell short of expectations; and brand promotion fell short of expectations.