According to Financial and Economic APP, Caitong Securities released a research report stating that it maintained a "shareholding" rating for Quanfeng Holdings (02285), expecting the company to achieve revenues of 1.67/1.97/2.24 billion US dollars from 2024 to 2026, with a net income attributable to the mother of 0.13/0.15/0.17 billion US dollars. The company's third quarter forecast exceeded expectations, with sufficient upward elasticity in the OPE industry. According to the announcement, the profit forecast was raised, further highlighting the current valuation cost performance ratio.

Event: The company issued a positive profit forecast, expecting to achieve a net income of approximately 0.1 billion US dollars from January to September, a year-on-year increase of over 300%. The company's net income for 1H2024 was 0.062 billion US dollars, and it is expected to achieve a profit of approximately 0.038 billion US dollars in single Q3.

The main views of Caitong Securities are as follows:

Flagship brand EGO performed strongly, driving accelerated growth in Q3 revenue.

The company aims for revenue growth of over 20% for the whole year and is confident in achieving the annual target. According to the annual target, the company's H2 revenue growth rate is expected to reach 30%. The accelerated revenue growth of the company is mainly due to the strong performance of the flagship brand EGO in terminal sales, the low base in the same period of 2023, and the recovery of replenishment orders after channel destocking.

Benefiting from cost dilution, the company's gross margin continues to improve.

The company's gross margin has improved compared to H1, and it is expected that the main reasons are the continuous optimization of product structure, the release of economies of scale, and the overlapping decrease in lithium battery costs, which will to some extent offset the adverse impact of RMB appreciation.

The end of channel destocking combined with interest rate cuts is expected to continue driving high revenue growth in H2.

Q3-4 is the year-end promotion and the preparation period for 2025 inventory. As channel inventory gradually enters a healthy state, the subsequent channel shipment end is expected to synchronize with POS sales at the terminal. Meanwhile, the Fed's interest rate cuts are expected to drive elasticity in demand for real estate post-cycle products and increase consumers' purchasing power for large items, with OPE category showing greater elasticity high revenue growth for the company is expected to continue.