Event: The company released its 2024 three-quarter report. The company achieved total operating income of 1.515 billion yuan in 2024Q1-Q3, or -33.70% year-on-year; realized net profit to mother of 0.145 billion yuan, or -20.15% year-on-year. Among them, the total revenue of 2024Q3 in a single quarter was 0.472 billion yuan, or -35.40% YoY; net profit to mother was 0.053 billion yuan, -20.00% YoY.

The photovoltaic business dragged down the company's overall revenue. The company's revenue continued to decline in the third quarter of 2024, mainly due to the drop in sales prices of solar photovoltaic module products in the current period.

Profitability was optimized, and gross margin increased simultaneously. Gross profit margin: 2024Q3's gross margin increased 1.57pct year-on-year to 21.72%. Rate side: The 2024Q3 sales/management/R&D/finance rate was 0.90%/4.29%/3.30%/1.84%, with a year-on-year change of 0.14pct/-1.11pct/-0.26pct/1.7pct. Among them, the decline in the R&D expense ratio was mainly due to the reduction in the use of R&D materials in the current period; the increase in the financial expense ratio was mainly due to interest accruing on current convertible bonds. Net interest rate: The company's net interest rate in 2024Q3 changed 2.15pct to 11.69% year-on-year.

The photovoltaic business affects the company's net cash flow. 2024Q3's net operating cash flow was 0.042 billion yuan, a year-on-year decrease of 62.55%, mainly due to an increase in payment payments for the PV business in the current period. Among them, cash received from sales of products was 0.419 billion yuan, an increase of 88.97% over the previous year.

Outlook: Based on the home appliance sector, led by the new energy sector. 1) Home appliance business: The company's current white goods business has a high market share and strong customer stickiness. In the future, the company will increase investment in R&D, maintain steady growth in performance, and expand the upstream, middle and downstream industrial chain. 2) PV module business: At the end of January 2024, the infrastructure project of Xingshuaier Photovoltaic Company was officially put into operation, and production capacity is gradually climbing. In the future, it is planned to further achieve 5GW/year production capacity in the shortest possible time.

Profit forecasting and investment advice. Considering the company's performance in the first three quarters of 2024 and the overall environment of the PV industry, we expect the company to achieve net profit of 0.165/0.197/0.232 billion yuan in 2024-2026, an increase of -18.4%/19.0%/17.9% year-on-year, and maintain an “increase” investment rating.

Risk warning: Prices of raw materials fluctuate greatly, the expansion of the photovoltaic energy storage business falls short of expectations, and demand in the white power industry falls short of expectations.