Event: The company released its 2024 three-quarter report. In 2024Q1-Q3, the company achieved total operating income of 202.971 billion yuan, an increase of 2.17% year on year; net profit to mother was 15.154 billion yuan, an increase of 15.27% year on year. Among them, the total revenue of 2024Q3 in a single quarter was 67.349 billion yuan, up 0.47% year on year; net profit to mother was 4.734 billion yuan, up 13.15% year on year.

Domestic sales improved month by month, and export sales increased steadily. Domestic sales: retail sales of Q3 terminals improved month by month. Among them, Casadi retail sales increased higher than the overall level; export sales: European and American market share continued to increase; emerging markets optimized product structures, and the Q3 South Asian market grew by more than 30%.

Profitability is steady, and expense ratios are continuously optimized. Gross profit margin: In 2024Q1-Q3/Q3, the company's gross margin increased by 0.13/0.07pct year-on-year to 30.85%/31.32%. Domestic and foreign gross margins increased year-on-year in the first three quarters. Rate side: 2024Q3 sales/management/ R&D/ finance rate is 15.00%/3.89%/4.52%/0.08%, year-on-year change -0.51pct/-0.16pct/0.01pct/0.23pct, with strong cost management capabilities. Sales rate optimization is mainly due to promoting digital transformation and improving efficiency; management rate optimization is mainly due to the application of digital tools to improve organizational efficiency; increase in financial rates is mainly due to increased overseas interest expenses affected by interest rate hikes. Net interest rate:

2024Q1-Q3/Q3 net margin changed 0.93/0.87pct year-on-year to 7.61%/7.17%.

Cash flow declined slightly, and profit reservoirs increased month-on-month. Cash flow: 2024Q3's net operating cash flow was 6.057 billion yuan, -5.54% YoY. Among them, cash received from sales of goods was 71.706 billion yuan, -0.17% year over year. Balance sheet: As of 2024Q3, the company's contract liabilities were -37.39%/+8.28% year over year; inventory -3.5%/-2.54% year over year; other current liabilities -1.22%/+20.35% year over month.

Haier Smart Home plans to control the daily order through fiduciary voting rights. Bingji (a related party of the company) entrusts Guanmei (a wholly-owned subsidiary of the company) with voting rights corresponding to the 55% shares held by Youjin (Rishun holding party), and companies related to Youjin and Rishun will be included in the scope of Haier's consolidated statements. This matter constitutes a related transaction, but does not involve payment of consideration arrangements. After the transaction is completed, Rishunhe Company's business systems and data management will be opened to enhance supply chain management capabilities. Domestic sales further enhance logistics capacity building; export sales deepen localized brand building and improve logistics operation capabilities.

Profit forecasting and investment advice. Considering the company's performance in the first three quarters of 2024 and the overall environment of the industry, we expect the company to achieve net profit of 19.111/21.862/24.786 billion yuan in 2024-2026, an increase of 15.1%/14.4%/13.4% year-on-year, and maintain a “buy” investment rating.

Risk warning: raw material prices fluctuate, real estate market fluctuation, and market competition intensified.