Key points of investment:

Revenue surpassed expectations, and growth was strong. Supor 2024H1 is expected to achieve revenue of 10.965 billion yuan, an increase of 10% year on year; it is expected to achieve net profit of about 0.941 billion yuan, an increase of 7% year on year; net profit without return to mother is 0.923 billion yuan, an increase of 8% year on year. Among them, Q2 is expected to achieve revenue of 5.587 billion yuan in a single quarter, an increase of 11% year on year; net profit to mother is expected to be 0.471 billion yuan, up 6% year on year; and net profit after deduction is 0.462 billion yuan, up 7% year on year. The company's revenue exceeded our expectations, and the performance was in line with expectations.

Domestic sales outperformed the industry, and channel competitiveness was remarkable. In terms of domestic sales, the online and offline market share of the company's core categories continues to rise. Against the backdrop of a decline in the overall industry, several major kitchen categories have declined to varying degrees. 2024H1 air fryer/rice cooker/electric kettle/wall breaker sales have declined by 34%/6%/9%/15% respectively, but the company has achieved superior growth, benefiting from the immediate demand of sales categories, continuous innovation on the product side, and healthy concept-related categories such as pressure cookers, casseroles, and steamers. The company's two major business segments superimpose new categories of new businesses such as cleaning appliances and coffee machines, and are continuing to expand. It is hoped that the new categories will drive continuous and steady growth in the future. In terms of channels, the company has demonstrated strong competitiveness. Online channels are under some pressure, but offline O2O and B2B channels have performed well.

Export sales benefited from the completion of inventory removal+demand recovery to achieve steady growth. In terms of export sales, SEB Group, an affiliate of the company, is confident that sales will increase throughout the year. The overall overseas recovery trend in the first half of the year was obvious. Under the influence of completed overseas inventory removal/weak inventory replenishment+ low base, the company's export sales increased significantly. According to the latest estimated amount of related transactions in '24, the company and SEB Group are expected to trade 6.2 billion yuan in '24. The target growth rate is around 3%, and there is still room for an increase in the target growth rate for the whole year. Furthermore, in the face of problems such as the imposition of tariffs by the US and rising overseas freight rates, the company's overseas factories and the like are well prepared, the share of sales in the US is low, and the overall risk is manageable.

Expense control is excellent. The company's 24Q2 gross margin level is expected to remain stable. There was a slight decline in 24Q1, down 0.8 pcts to 24.4% year on year, mainly due to product restructuring; in terms of costs, the company's 24Q2 expense ratio is expected to maintain a good level of control. The company's marketing efficiency is high. The key expenses are R&D expenses, and the overall cost ratio is stable and controllable.

Maintain profit forecasts and “buy” ratings. We maintained our 24-26 profit forecast of 2.32/2.54/2.66 billion yuan, with year-on-year growth of 6.2%/9.8%/4.7%, respectively, corresponding PE 17/15/15 times, respectively. Considering that the company is a leading enterprise in traditional small household appliances, while consolidating the dominant position of traditional e-commerce platforms, domestic sales continue to increase investment in new e-commerce platforms such as Douyin and accelerate the successful implementation of the online channel transformation strategy; export sales are growing steadily, and the company's market competitiveness continues to stand out, maintaining a “buy” rating.

Risk warning: raw material price fluctuation risk, exchange rate fluctuation risk.