Event: The 2024 three-quarter report was published easily. The company achieved revenue of 0.84 billion yuan in the first three quarters of 2024, YoY -11.2%; realized net profit to mother of 13.1 million yuan, and lost 16.331 million yuan in the same period last year. After conversion, the company achieved revenue of 0.23 billion yuan, YoY -31.9%; realized net profit to mother of -13.034 million yuan, YoY -244.6% in 2024Q3. We believe that in Q3, the domestic consumer boom was sluggish, and quarterly revenue was under pressure. The company adjusted its sales strategy, and the gross margin for the single quarter improved year-on-year, and we expect an improvement in operations.

Q3 single-quarter revenue declined year-on-year: In Q3, the domestic optional consumption boom was relatively sluggish, and due to the high base for the same period last year (2023Q3 revenue YoY +79.8%), Q3 times easy single-quarter revenue declined year-on-year. We infer that Q3 companies' online revenue declined significantly year-on-year, and offline store revenue performance was stable. According to data from Jiuqian, Q3 Easy Online (Tmall + JD+ Douyin) sales YoY is -39.5%. Looking ahead to the future, the company is actively developing new products, continuously improving the layout of online and offline channels, gradually expanding overseas channels, and revenue is expected to pick up.

The gross margin for the Q3 quarter improved markedly year over year: the Q3 easy gross margin was 66.8%, +2.9 pct year over year. We believe that the company's gross margin improved significantly in a single quarter, mainly due to sales strategy adjustments, continuous product structure optimization, and the continuous recovery of offline store operations with relatively high gross margins.

Q3 profitability in a single quarter was under pressure: The net interest rate for Beijiao Q3 was -5.6%, -8.2pct year over year. The company's net interest rate turned negative in a single quarter, mainly due to the decline in revenue, which weakened the scale effect, and the investment of marketing expenses was more rigid. The cost ratio for the Q3 period was +13.0 pct year over year, with sales, management, and R&D expenses rates +6.4 pct, +3.1 pct, and +2.7 pct year over year.

In the future, as the company's operations improve and the efficiency of cost investment is optimized, profitability is expected to increase.

Q3 net operating cash flow outflow: BeijiangQ3 net operating cash flow - -0.04 billion yuan, compared to 0.01 billion yuan in the same period last year. The company's operating cash flow changed from positive to negative, mainly due to a decrease in sales scale, YoY -32.9% of the cash obtained by selling products and providing labor services in Q3.

Investment advice: The small massager industry has strong growth, and there is plenty of room for improvement in the scale and concentration of the industry. It is easy to cultivate the industry for 20 years. It has outstanding product, channel and brand advantages, and is expected to continue to lead the development of the industry. As consumption gradually recovers and new products continue to be released, the company's operating performance is expected to show greater flexibility. We expect the company's EPS to be 0.32/1.36/1.74 yuan from 2024 to 2026; maintaining a buy-A investment rating. Considering the company's growth, we will give a dynamic price-earnings ratio of 30 times in 2025, which is equivalent to a 12-month target price of 40.73 yuan/share.

Risk warning: the price of raw materials has risen sharply, the competitive pattern of the industry has deteriorated, and the expansion of new products falls short of expectations