Incident: On October 29, the company released its 2024 three-quarter report. 2024Q1-3 achieved operating income of 16.449 billion yuan/YoY +39.56%, net profit of 1.472 billion yuan/YoY +21.29%, net profit of 1.303 billion yuan/YoY +41.13% after deducting net income of 1.303 billion yuan/YoY +41.13%; single 2024Q3 achieved operating income of 6.8 billion yuan/YoY +44.05%, net profit to mother of 0.599 billion yuan/year over year + 52.44%, net profit not attributable to mother 0.537 billion yuan/year over year +41.98%.

Overseas demand is booming, and the three major categories are developing steadily. 2024Q3's revenue was +44.05% year-on-year to 6.8 billion yuan, and the growth rate increased month-on-month, mainly due to: ① the boom in online demand in overseas markets, and Amazon Prime members promoted daily sales to a record high; ② the company focused on developing its core business and continued to promote new products in the three major categories. By product, 1) Charging and energy storage category: In the field of digital charging, the company released the new Anker Prime series in August and the new Anker MagGo series in September; in the field of consumer energy storage, the Anker SOLIX C300 DC series was launched in August, and new tracks such as consumer energy storage continued to contribute to revenue growth. 2) Intelligent innovation category: In the field of smart security, the first fingerprint handle lock, the eufy Smart Lever LockC33, was launched in July, and the eufyCam S3 Pro was launched in September; in the field of smart cleaning, the X10 Pro Omni sweeper sold at the beginning of the year achieved outstanding sales performance on Prime Day in July. 3) Smart video: In the field of wireless audio, the AeroFit 2 open earphones and Space One Pro headsets were launched in September, and the products were greatly upgraded; in the field of smart projection, Capsule Air and Cosmos 4K SE projectors were launched to further upgrade product performance.

Overseas markets have maintained strong growth, and channel construction for independent stations has been strengthened. 1) By region, in 2024Q1-3, the company achieved revenue of 0.573/15.875 billion yuan domestic/overseas, respectively; 2) By channel, 2024Q1-3 online/offline channels achieved revenue of 11.497/4.952 billion yuan, respectively, +41.70%/+834.2% year-on-year, respectively, of which the company's independent website contributed 1.646 billion yuan/year over year +104.52%, accounting for 10.01% .

Costs and expenses are under pressure, and investment returns increase profits. 1) On the gross profit side, 2024Q3's gross margin was -0.47pct to 42.99% year on year, or due to the year-on-year increase in shipping freight rates; 2) On the cost side, the company's 2024Q3 sales/management/ R&D/ finance cost ratio was -0.81 pct/+0.15 pct/+1.85pct to 22.00%/3.29%/8.86%/-0.14%. The increase in management expenses was mainly due to an increase in salary and share payment expenses. This is due to increased remuneration for R&D personnel. The overall period expense ratio was +0.52 pct to 34.01% year on year; 3) On the profit side, the 2024Q3 investment income reached 0.105 billion yuan/year on year +416%, and the company's net interest rate to mother was +0.48 pct to 8.81% year over year.

Investment advice: The company is a benchmark for overseas brands in China. It has not only achieved core competitiveness in various aspects such as existing products/brands/channels, but also confirms the management's strategic vision; the existing infrastructure has built the foundation, and has great potential in the face of continuous iteration in the face of a broad market. During the reporting period, the company continued to promote innovation, and the profit side was significantly optimized. Considering factors such as 2024Q3's performance exceeding expectations and the company's continued promotion of categories and channel expansion, we expect the company's revenue to 2024-2026 to be 23.69/29.48/34.02 billion yuan respectively, net profit to mother 2.088/2.577/3.112 billion yuan, EPS of 3.93/4.85/5.86 yuan/share, respectively. The current stock price corresponds to 20.0/16.2/13.4 times PE, respectively, maintaining a “buy” rating.

Risk warning: Product development risks or sub-category development seriously fall short of expectations; drastic reduction in bargaining power or significant cost increases on the channel side; domestic and foreign macroeconomic risks; drastic changes in talent and organization.