Incident: 1) Mr. Gu Jiangsheng, the former chairman of the company, resigned and continued to serve as the company's director and board strategy committee member. Mr. Kuang Guangxiong is the new chairman. He has served as Midea's multi-department CFO and is currently the vice president of Yingfeng Group. 2) In addition, the company announced the 2024 restricted stock incentive plan. The incentive targets a total of 84 people, mainly the company's core backbone, and the award price was 11.84 yuan/share. The assessment target is net profit for 2025-2027 not less than the average net profit for the three years 2021-2027 (100%/105%/110.25% (excluding impairment of goodwill and the impact of incentive amortization)). According to public company estimates, the 2024-2028 film stalls were 0.12/0.48/0.03/0.013/0.003 billion yuan respectively. According to estimates, the net profit targets for 2025-2027 were 1.785/1.895/2.008 billion, respectively Yuan, corresponding to 2025-2027 PE is 10.7X/10.1X/9.5X, respectively.

Store integration, channel cultivation, and external film efficiency improvement. 1) Insider Video: Upgrading the 1+N+X channel and store format matrix, and the entire customized stores maintained medium- and high-speed expansion, and 24H1 integrated stores accounted for more than 35% of total package film sales; the retail system was deeply cultivated to promote the transformation of the retail division from management to an enabling organization to establish a custom home video center, Lehuo Film Management Department, and shopping center management department. The focus was on developing high-potential categories and high-potential channels. The new channels developed independently while ensuring healthy development through dual performance measurement and other channels. 2) External image: The Vietnamese company accelerated its development and achieved significant improvements in production scale and operational efficiency; the Mexican company successfully moved to a self-built factory and steadily improved its operating capacity; the US (mattress) company officially put into operation, starting a new journey of localized operation. Focusing on key countries and regions (North America, the United Kingdom, Australia and New Zealand, Western Europe, Japan), vigorously developing superior business, further increasing SPO business share, deepening strategic cooperation with major customers, setting up benchmark brand stores for finished products in India, Vietnam, Thailand, Uzbekistan, Kazakhstan, etc., and the strength of overseas brands under the title of the Central Asia Cup Golf Tournament continues to improve.

Profit forecast and investment rating: We expect net profit to be 1.98 billion yuan, 2.16 billion yuan, and 2.39 billion yuan respectively in 2024-2026, corresponding to PE of 9.7X, 8.9X, and 8.1X, maintaining a “buy” rating.

Risk warning: Real estate recovery falls short of expectations, consumption recovery falls short of expectations, integration falls short of expectations, risk of measurement errors.