Matters:

The company released its 2024 three-quarter report. 24Q1-Q3 achieved revenue of 16.45 billion yuan, a year-on-year increase of 39.6%; net profit to mother was 1.47 billion yuan, an increase of 21.3% over the previous year. Looking at a single quarter, 24Q3 achieved revenue of 6.8 billion yuan, a year-on-year increase of 44.1%, and net profit to mother of 0.6 billion yuan, an increase of 52.4% year-on-year.

Commentary:

Revenue is picking up again, and the potential continues to stand out. 24Q1-Q3 achieved revenue of 16.45 billion yuan, or +39.6% year over year, of which single Q3 revenue was 6.8 billion yuan, or +44.1% year over year. Revenue is still accelerating against the backdrop of a high base over the same period. Looking at each channel, we believe that on the one hand, it has benefited from overseas online demand (24Q3 Amazon Prime Day sales +11%). On the other hand, the company's independent website also brought a certain increase. The revenue share was 9.6% (24H1) → 10.0% (24Q1-Q3). Considering the third quarter as Amazon's big promotion node, if it had higher performance in the regular quarter, it had an incremental effect on the report, so that online revenue increased from +38.5% to 24Q1-Q3 compared to +41.7% year over year. By product, a number of innovative products were launched in the three major categories of 24Q3. We judge that the overall growth trend is expected to continue in the first half of the year. Among them, the energy storage business may still more than double. Sweepers are expected to achieve relatively rapid growth under new product iterations and a low base, and core categories such as security and small charging are also expected to perform well.

Performance exceeded expectations, and profitability was stable. 24Q1-Q3 achieved net profit of 1.47 billion yuan to mother, +21.3% year over year, including a single Q3 performance of 0.6 billion yuan, +52.4% year over year, deducting 0.54 billion yuan of non-performance, and +42.0% year over year, exceeding market expectations. Among them, investment income contributed a lot to increasing current results (24Q3 increased by about 85 million yuan year on year). 24Q3 gross profit margin was 43.0%, -0.5pct year on year. We determined that in addition to disturbances from external factors such as shipping costs and exchange rates, changes in product structure brought about by the company's energy storage business also had a certain impact on gross profit. In terms of cost ratios, 24Q3's sales/management/ R&D/ finance rates were 22.0%/3.3%/8.9%/-0.1%, respectively. The R&D cost rate increased significantly. It is estimated that it is related to the company's investment in new business directions such as household storage. Financial cost ratio optimization is mainly due to fluctuations in exchange profit and loss, and the overall cost ratio is relatively stable under the influence of the dilution of revenue scale effects. Looking at 24Q3, the company's net interest rate/net interest rate of non-return to mother was +0.5pct/-0.1pct year-on-year to 8.8%/7.9%.

Nodal catalysis is greatly promoted in the short term, and long-term high growth is still driving. Currently, the company's statements have been effectively implemented for several consecutive quarters. Although the market has some concerns about the sustainability of high growth and the stability of tariffs and profits, we believe that the company's internal transformation dividends are only halfway through, and there is still a guarantee of high-quality management in the future. Looking at the end of the year, the fourth quarter ushered in traditional peak sales seasons such as fall promotions and Black Five Network. Considering that overseas demand is still strong, the company's continued growth potential is expected to drive stock price catalysts. In the medium to long term, the company's category focus is accelerating, energy storage & security continues to grow, and sweepers are recovering. Household storage is expected to continue to grow. On this basis, independent stations, offline channels in Europe and other channels will be further expanded. Although there is still a demand for investment in market development and new product development, high revenue growth can dilute costs during the period, and profitability is expected to remain stable. Furthermore, with the support of brand premium+supply chain optimization, there is no need to worry too much about potential tariff risks; short-term pullbacks are an opportunity window for value layout.

Investment advice: The company's growth potential is sufficient, and the operation exceeds market expectations. We adjusted the 24/25/26 EPS forecast to 3.97/4.94/6.02 yuan (previous value 3.82/4.75/5.80 yuan), corresponding PE 21/17/14 times. Referring to the DCF valuation method, we raised our target price to 95 yuan, corresponding to 24 times PE in 24 years, and maintained a “strong push” rating.

Risk warning: macroeconomic fluctuations, industry competition intensified, category adjustments fell short of expectations.