The company disclosed the 2024 three-quarter report. 9M2024 achieved total operating income of 12.69 billion yuan, +17.99%, net profit to mother of 0.785 billion yuan, +6.66% year over year. Among them, 3Q24 revenue was +12.88% year over year, and net profit to mother was +0.53% year over year. Revenue performance was in line with our expectations (+8% ~ +15%), and net profit to mother was weaker than our expectations (+5% ~ +14%). The company has benefited from a high export boom. From a cyclical perspective, the subsequent export growth rate may decline, but the overseas small household appliance market is dominated by stock, and demand is being released steadily. As a leading enterprise, we are still optimistic about its long-term steady growth strength. Maintain a “buy” rating.

Domestic sales business faced heavy pressure in 3Q24

3Q24's domestic sales are still under heavy pressure. Revenue was -15.3%. According to Aowei Cloud Network data, the retail performance of the 9M24 small kitchen appliance industry was weak (-1.4% and -11.4%, respectively). Jiuqian data also showed that the online retail sales of the Morphy brand were under pressure. The Baishengtu and Dongling brands increased slightly online. We expect the company's brand business may be under pressure. Considering that trade-in of home appliances is currently being carried out domestically, some regions also include small kitchen appliances in the scope of subsidies, which may slightly optimize the demand environment for small kitchen appliances, which is beneficial to the company's domestic sales recovery.

The export business achieved high growth in 3Q24. In 4Q24 or facing high base challenges, 3Q24 exports continued the high growth trend. Among them, 1Q/2Q/3Q export revenue was +29.7%/+25.1%/+20.3% year-on-year, respectively. Overseas demand and inventory replenishment demand continued in the 3Q. Judging from the company's key export categories, data from the General Administration of Customs showed that the export value of 3Q24 toaster, coffee machine, and food grinder products was +12.3%/+16.4%/+14.2%, respectively, but the export growth rate fluctuated in September (+2.6%/+15%/+8.2%, respectively), and the base figure gradually increased. We believe that the company's 4Q export revenue growth may be relatively moderate.

3Q24 gross margin was affected by revenue restructuring, and the 9M2024 gross margin of the company still fluctuated greatly, and the 9M2024 gross margin was 21.41%, -1.09pct year on year. Among them, the gross margin of 3Q2024 was 2.23 pct year over year, which we believe was mainly affected by the increase in the share of the export revenue structure. 9M2024, the company's overall cost ratio was +0.13pct year-on-year. Among them, it was mainly affected by the financial expense ratio +0.92 pct year on year due to large fluctuations in exchange gains and losses and a decline in interest income.

It has the advantages of the small household appliance industry chain and is optimistic about long-term steady growth

We maintain our 24-26 forecast net profit, which corresponds to EPS of 1.31, 1.50, and 1.69 yuan (EPS slightly increased due to share repurchases). As of 2024/10/28, Wind comparable's average PE was 23x. The company's export ODM account was relatively high, and changes in revenue structure or affected the gross margin level. At the same time, only some domestic categories benefited from replacement subsidies, giving the company a valuation of 14xPE in 2025. The adjusted target price was 21.0 yuan (previous value 18.20 yuan).

Risk warning: Overseas demand is declining; domestic market development is blocked; industry competition is intensifying.