2024Q1-Q3's performance is under phased pressure, the household strategy continues to be deepened, and the “buy” rating is maintained

In 2024Q1-Q3, the company achieved operating income of 13.88 billion yuan (-16.21%, same below), net profit to mother of 2.031 billion yuan (-12.1%), after deducting non-return net profit of 1.76 billion yuan (-19.9%). Looking at a single quarter, the company achieved operating income of 5.3 billion yuan (-21.2%), net profit to mother of 1.04 billion yuan (-11.6%), and net profit of 0.99 billion yuan (-12.6%) after deducting non-return net profit of 0.99 billion yuan (-12.6%). Considering that real estate is still in the adjustment period, we lowered our profit forecast. The net profit for 2024-2026 is 2.736/2.836/3.053 billion yuan (the original value was 2.91/3.077/3.33 billion yuan), the corresponding EPS is 4.49/4.66/5.01 yuan, and the current stock price corresponds to a PE of 15.0/14.5/13.5 times. The company's household strategy is progressing steadily, and the growth resilience of industry leaders is still maintaining the “buy” rating.

Revenue splitting: declining real estate and cabinet revenue growth are under pressure, and trade-in may effectively boost terminal demand

By product, 2024Q1-Q3's revenue for cabinets/closets and accessories/bathroom/wooden doors was 40.3/7.19/0.8/0.83 billion yuan respectively, -21.99%/-18.99%/-1.62%/-17.10%, gross margin was 30.62%/40.88%/29.01%/26.75%, respectively, -3.28/+5.72/+0.24/+4.31pct. Under downward pressure from real estate, revenue growth in all categories of products is under pressure. By channel, in terms of retail channels, channels are under pressure due to weak downstream demand. Separately, distribution/direct management channel revenue was 10.39/0.53 billion yuan, respectively, -18.90%/+4.09% compared to the same period last year. In terms of engineering channels, 2024H1 bulk channel revenue fell 12.33% to 2.35 billion yuan. Looking ahead to the company's development, trade-in policies are being refined and implemented in various regions. It is expected to effectively activate the vitality of home terminal sales. As an industry leader, the company is expected to benefit excessively in standardized operations, and is optimistic about effectively boosting the company's 2024Q4 performance.

Profitability: Multi-dimensional cost reduction+refined management results are outstanding, and profitability is steady, moderate and upward

Mainly thanks to the full implementation of the company's multi-dimensional manufacturing cost reduction, organizational optimization, and cost control measures, the company's gross and net interest rates have risen steadily. The company's 2024Q1-Q3 gross profit margin was 35.5% (+1.6pct), with a period expense ratio of 19.7% (+2.2pct), with sales/management/R&D/finance expense ratios of 10.1%/6.7%/4.7%/-1.8%, respectively, with year-on-year changes of +1.5/+0.8/+0.2/-0.3pct; under the combined influence, the net sales margin for 2024Q1-Q3 was 14.7% (+0.8pct), net profit margin was 12.7% (-0.6pct). Looking at a single quarter, the company's 2024Q3 gross profit margin was 40.4% (+2.7pct), and the period expense ratio was 16.0% (-0.9pct); under comprehensive influence, the company achieved a net sales interest rate of 19.7% (+2.2pct) in 2024Q3, and gross and net profit margins increased markedly in the single quarter.

Risk warning: The recovery in terminal demand falls short of expectations; the pace of overall development is slowing down.