The company released its 24Q3 quarterly report, and the results were in line with expectations. According to the company's announcement, 1) The company achieved revenue of 13.004 billion yuan in 24Q1-Q3, down 12% year on year. Mainly due to continuous high temperatures, phased electricity restrictions, and weak consumer spending intentions, the net profit to the mother was 0.923 billion yuan, a year-on-year decrease of 19.24%, and realized deducted non-net profit of 0.901 billion yuan to the mother, a year-on-year decrease of 12.12%. 2) 24Q3 achieved revenue of 4.024 billion yuan, a year-on-year decrease of 12.96%, net profit to mother of 0.211 billion yuan, a year-on-year decrease of 12.43%, after deducting non-net profit of 0.196 billion yuan, a year-on-year decrease of 6.67%. (Compared to the adjusted caliber)

Continue to focus on improving commercial power, and drive the growth of the electrical appliance industry through trade-in. According to the company announcement and the company's public account, the company focuses on improving commercial power and integrating multiple business formats to promote business transformation and innovation. The company focuses on the Sichuan and Chongqing region, continues to develop joint business plans to leverage brand resources, and is committed to integrating multiple business formats in department stores, supermarkets, electrical appliances, and automobile trade, and strives to improve profits with multiple growth points. As of 24Q3, the number of department store/supermarket/electrical/auto trade network points was 50/149/42/32 respectively, a net change of 0/-3/+1/-6 compared to the end of 23. Since Q3, trade-in rules have been implemented in various regions. The Chongqing home appliance market showed strong supply and sales, driving a rapid rise in passenger traffic at Zhongbai Electric's stores, with sales increasing by more than 70% over the same period last year. The four major business formats of department stores, supermarkets, electrical appliances, and auto trade were generally under pressure in 24Q1-Q3. Revenue in Chongqing changed by -8.20%/-2.08%/1.88%/-30.31% year-on-year, respectively.

During the National Day Golden Week, sales of Zhongbai Electric Appliances exceeded 0.2 billion yuan, an increase of 115% over the previous year. We believe that the trade-in policy is still being implemented, and consumer electronics consumption is expected to continue in Q4.

Q3 Gross margin declined year-on-year, and the increase in income from Malaysian consumer investments led to an improvement in profits. According to the company announcement, 24Q1-Q3's gross margin reached 25.94%, +0.17pct year-on-year. The company's expense ratio for the first three quarters of 24 years reached 19.56%, +0.50pct year on year. Among them, the sales/management/R&D/finance expenses ratio was 14.35%/4.80%/0.09%/0.32%, respectively, with year-on-year changes of +0.97/-0.06/-0.05/-0.36pct, respectively. Under the combined influence, the company's net profit margin reached 7.10%, -0.64pct year on year.

24Q3's gross sales margin was 24.36%, -1.12pct. Among them, the sales/management/R&D/finance expense ratios were 15.24%/5.02%/0.08%/0.34%, respectively, with year-on-year changes of +1.06/+0.44/-0.06/-0.21pct, respectively. In addition, the impact of the 24Q3 savings and high base figure was eliminated, achieving investment income of 0.147 billion yuan, an increase of 94.62% over the previous year. Compared with the 24H 1-20.52% growth rate, it became a strong driving force for Q3's net profit. Under the combined influence, the company's net interest rate of +0.03pct year-on-year reached 5.25%.

Sales were strong at the opening of the department store festival, and the opening performance of fresh food discount stores was impressive. According to the company's official account, since this year, the company has coordinated the four major business formats of department stores, supermarkets, electrical appliances, and automobiles to launch a series of major promotions. During the National Day Golden Week, the department store launched nearly 180 field trips and special sales events, achieving sales of more than 13 million yuan. The 5th Zhongbai Shopping Festival was grandly opened on October 30th. At the same time, the company is exploring business model innovation to drive new models and new store growth. On September 24, the fifth fresh+discount supermarket opened. As of 17 o'clock on the same day, store sales increased 6 times compared to normal. During the National Day golden cycle, the “fresh+discount” supermarket market and Yingli Fine Living Center achieved a comparable increase of 32% in sales and a 36% increase in the number of transactions.

Maintain a “buy” rating. The company has a complete store layout and extensive user stickiness in the Sichuan and Chongqing regions. Revenue and profit declined in 24Q3 due to economic downturn and phased electricity restrictions due to high temperatures in Chongqing. However, the company is promoting the transformation and upgrading of retail supermarkets, building multi-scene stores, and promoting the integration of various business formats such as department stores, supermarkets, and electrical appliances, and the company's performance growth rate is expected to recover. Considering the operating pressure of the main business and continued competition in the industry, we lowered net profit to mother for 24-25 to 1.246/1.353/1.448 billion yuan respectively (the original value was 1.366/1.492/1.611 billion yuan), corresponding to PE by 8/7/7 times, maintaining the “buy” rating.

Risk warning: Consumer demand falls short of expectations, the performance of the new business format falls short of expectations, and traffic falls short of expectations.