The company's main products are air fryers, air ovens, etc. The company's ODM/OEM business model is the main business model, and independent brands are progressing steadily. By product, about 88% of the company's revenue comes from air fryers and air ovens, and from a regional perspective, about 84% of the company's revenue comes from foreign customers (2022 data).

The company's revenue continued to grow at a high rate. The company achieved revenue of 1,260 million yuan in the first three quarters of 23 years, +19.63% year-on-year, and net profit of 176 million yuan, +33.67% year-on-year. Among them, 23Q3 achieved revenue of 408 million yuan, +22.72% year-on-year, and net profit of 49 million yuan, -12.49% year-on-year. Judging from the revenue growth rate, the company achieved revenue growth of more than 20% for two consecutive quarters.

Profitability fluctuated, and changes in the financial expense ratio led to a decrease in net interest rate of 23Q3. The company's profitability fluctuated greatly in the short term, with 23Q3 gross margin +1.42pp to 21.94%, sales/management/R&D/financial expense ratio respectively changing -0.51pp/+0.13pp/-1.38pp/+6.37pp to 0.83%/2.60%/3.63%/-0.31%, 23Q3 net profit margin year-on-year -4.78pp to 11.88%, and the increase in financial expenses led to a decline in the company's profitability in a single quarter.

Profit forecasts and investment advice. The company's wholly-owned subsidiary plans to invest 600 million yuan to build production capacity for products such as the original air fryer and Xintuo coffee machine. The expansion of new categories is expected to contribute new revenue to the company. We expect the company to achieve net profit of 236 million yuan, 234 million yuan, and 280 million yuan respectively in 2023-2025. Referring to comparable company valuations, the company was given a PE valuation of 15-18 times in 2023. The corresponding reasonable value range is 18.75-22.50 yuan, covering the first time, and is rated “superior to the market”.

Risk warning. The concentration of customers is too high, and the expansion of new categories falls short of expectations.