Key points of investment:

The company's performance was high in '23, and the overall performance remained steady. On January 20, 2024, the company announced an advance announcement of the 2023 annual results. It is estimated that the net profit attributable to the owner of the parent company in 2023 after deducting non-recurring profit and loss will be 273.06 million yuan to 327.67 million yuan, an increase of 90.079 million yuan to 144.6899 million yuan compared with the same period last year, an increase of 49.23% to 79.07% over the previous year; the net profit attributable to the owners of the parent company is expected to be 28.211 million yuan to 338.61 million yuan, and Compared with the same period last year, it will increase by 420.54 million yuan to 98.514 million yuan, an increase of 17.50% to 41.03% over the same period last year. Among them, according to the company's disclosure announcements and data, the company's net profit for the Q4 single quarter is expected to be -15% to +58% year over year, and net profit without deduction back to mother +76% year over year to +196% year over year. The company continues to optimize its product structure, accelerate product iteration, and drive profitability improvement through cost reduction and internal management efficiency. The company's annual performance is steady and improving, in line with our previous expectations.

The multi-channel layout continues to advance. Looking at physical channels, in terms of physical channels, the company adheres to an all-regional and omni-channel strategy to continuously promote the dealer layout of empty sales areas, continue to expand and optimize the dealer team, improve the terminal store layout, and accelerate channel sinking. In terms of engineering channels, the company has also actively expanded emerging e-commerce platforms including Douyin, Kuaishou, Pinduoduo, etc.; in terms of engineering channels, the company has also actively expanded emerging e-commerce platforms including Douyin, Kuaishou, Pinduoduo, etc.; in terms of engineering channels, the company has achieved rapid growth. Establish strategic partnerships with high-quality real estate agents directly or through dealers to supply products such as yuba, liangpa, clothes dryers, and integrated ceilings for real estate companies' projects. According to data from the National Bureau of Statistics, in 2023, China's residential housing achieved a total completion area of 724 million square meters throughout the year, an increase of 17.2% over the previous year. The company's engineering channel is expected to benefit from the increase in completed area throughout the year to achieve revenue growth.

Maintain an “overweight” investment rating. We maintain our previous profit forecast for the company. We expect to achieve net profit of 310 million yuan/358 million yuan/399 million yuan in 2023-2025, respectively, with year-on-year increases of 29.3%/15.4%/11.4%, corresponding to current price-earnings ratios of 13 times/11 times/10 times, respectively. The company still has advantages in the Yuba category. Considering that with the continuous optimization and upgrading of the product structure and the pressure on raw material costs ease, the company's profitability is improving steadily. In terms of dividends, the company has implemented 4 dividends since the A-share listing in 2020, with a cumulative cash dividend of 822 million yuan. Since listing, the dividend rate has reached 87.06%. The company's overall dividend ratio has remained at a high level, the long-term allocation value is prominent, and the “increase in weight” investment rating has been maintained.

Risk warning: raw material price fluctuation risk; real estate policy fluctuation risk; industry competition exacerbates risk