Performance summary: The company released its 2024 three-quarter report. In the first three quarters of 24, the company achieved revenue of 1.72 billion yuan, +40.1% year over year; realized net profit to mother of 67.136 million yuan, +6.5% year over year; realized deducted non-net profit of 23.347 million yuan, or -41.2% year over year. Looking at a single quarter, Q3 achieved revenue of 0.66 billion yuan, +41.9% year on year; realized net profit of 5.435 million yuan, or -69.7% year over year; realized net profit of 3.076 million yuan after deduction, or -81.9% year on year. Revenue growth is accelerating, and profitability is under pressure.

In the business expansion phase, the profit side is mainly affected by period expenses. During the reporting period, the company's overall gross margin was 18.7%, -0.1pp year on year. In terms of cost ratio, the company's total cost ratio was 17.1%, +2.8pp year on year. Among them, sales expense ratio/management expense rate/finance cost rate/ R&D expense ratio were 5.2%/6.7%/2.3%/2.9%, respectively, -0.4 pp/+1.1 pp/ +2.6 pp/ -0.5pp. The increase in the management expense ratio is mainly due to the expansion of the company, and the corresponding increase in labor costs and depreciation; the increase in the financial expense ratio is mainly due to a decrease in exchange earnings during the reporting period. Taken together, the company's net interest rate was 3.9%, -1.2pp year on year. According to the single-quarter data, Q3 gross margin was 18.1%, -2.1pp; the single-quarter expense ratio was 17.5%, +1.6pp, with sales expense ratio/management expense ratio/financial expense ratio/ R&D expenses ratio/ 5.1%/2.4%/2.8%, respectively, and -0.9pp/+0.9pp/+1.7pp/-0.1pp. Taken together, the Q3 net interest rate was 0.8%, -3.1 pp year over year. The company's net operating cash flow for the first three quarters of 24 was 0.28 billion, +381% year-on-year. The cash flow situation was good.

The strategic layout at home and abroad is clear, and production capacity needs to be gradually released. In terms of domestic sales, as market competition intensifies, the company plans to absorb price pressure by improving production technology and optimizing production and operation processes to meet the needs of domestic customers. At the same time, as leading domestic brands increase the quality requirements for tableware, the domestic sales market share is expected to continue to increase. In terms of export sales, the company set up a factory in Thailand to mainly meet export demand, and it is expected that the gradual release of production capacity will contribute to the increase in export sales. The company is currently in the phase of commissioning and climbing. In the future, it will make every effort to complete the investment and construction of projects such as the Ningbo Lanshan Plant, Shanteng Yihong, Guangxi Lulian, Dongguan Yilian and Thai Home Furnishing, etc., to accelerate the expansion of the company's production capacity in degradable environmentally friendly products and household daily necessities, further expand the company's business sector, extend the industrial chain, and cultivate new business growth points.

Profit forecasting and investment advice. EPS is expected to be 0.5 yuan, 0.75 yuan, and 0.98 yuan respectively in 2024-2026, and corresponding PE will be 31 times, 21 times, and 16 times, respectively. Considering the recovery in demand from overseas customers, domestic demand for food and tea continues to be booming, so it is recommended to continue to pay attention.

Risk warning: risk of increased competition in the industry; risk of large fluctuations in raw material costs; related items