Q3 performance was in line with expectations. The company achieved operating income of 70.579 billion yuan in the first three quarters of 2024, up 8.75% year on year, achieving net profit of 2.793 billion yuan year on year, up 15.13% year on year, and achieving net profit after deducting 2.289 billion yuan, up 10.99% year on year. Among them, Q3 achieved revenue of 21.937 billion yuan in a single quarter, -0.08% year on year, and realized net profit of 0.777 billion yuan year on year, with no return to mother. Net profit was 0.586 billion yuan, and the company's overall performance in Q3 was in line with our previous expectations in the performance outlook.

Due to internal and external resonance, the popularity of white electricity in Q4 is expected to increase further. According to industry online data, from January to September 2024, household air conditioners achieved total/internal/external sales volume of 154.84/83.77/71.07 million units, +13.0%/+0.7%/+32.1% year-on-year, and refrigerators achieved total internal/internal/external sales volume of 71.21/31.98/39.23 million units, +11.0%/+1.5%/+20.3% year-on-year respectively, washing machines achieved a total sales volume of 64.42/31.14/33.28 million units year-on-year, respectively +10.8%/+4.2%/+17.7%. The domestic sales market for the three major white power products has remained stable as a whole, and the export side is showing a rapid growth trend, driven by high demand from emerging markets such as the Belt and Road.

In terms of production scheduling, according to industry online data, Jiakong's domestic sales schedule was +5%/+19%/+21%, respectively, with exports showing explosive growth, with production scheduling +51%/+66%/+49% YoY in October-December; domestic refrigerator sales scheduled to produce +15%/+14%/+18% YoY, and +11%/+5% YoY in exports. Looking ahead to Q4, white power's boom is expected to rise under the combined influence of factors such as domestic “trade-in” policies and active overseas stocking. On the CCAC side, according to industry online data, from January to August 2024, CCAC achieved total sales of 85.95 billion yuan, +2.0%, with domestic/export sales reaching 73.69/12.28 billion yuan, respectively, -2.4%/+40.0% year over year, driven significantly by export sales; at the company level, CCAC's domestic sales account is relatively high, which is greatly affected by factors such as the decline in completion. However, large-scale equipment updates are expected to bring significant acceleration to CCAC, and the annual cumulative order growth rate is relatively good; while overseas business started late and the overall order base is small Q3 Achieved in a single quarter Double digit growth. Currently, the company is highly recognized in Eastern Europe, the Middle East, etc., and subsequent companies will gradually break through key overseas regions.

The increase in raw material prices led to a change in the share of domestic and foreign sales, and gross margin declined year-on-year in Q3. The company achieved a gross sales margin of 21.12% in the first three quarters, or -0.98pct year on year, of which Q3 gross margin was -2.45 pcts year over year to 20.76% year on year. We expect this is mainly due to factors such as changes in the domestic and foreign sales business structure in Q3 and the impact of rising prices of 24H1 copper and aluminum raw materials. In terms of the expense ratio for the period, the sales expense ratio for the first three quarters was -0.60 pct to 10.13% year on year, the management expense ratio increased slightly by 0.10 pct to 2.52% year on year, and the financial expense ratio increased 0.46 pct to -0.02% year on year. In the end, the company recorded a net interest rate of 5.90% for the first three quarters, a slight decrease of 0.21 pct year on year.

Maintain a “buy” investment rating. We maintain our previous profit forecast for the company. We expect to achieve net profit of 3.489/4.012/4.614 billion yuan in 24-26, respectively, +23%/+15%/+15% year-on-year, corresponding to the current price-earnings ratio of 11/10/9 times, respectively, to maintain a “buy” investment rating.

Risk warning: risk of fluctuations in raw material prices; risk of exchange rate fluctuations; risk of increased competition in the industry.