The company released a three-quarter report

24Q3 revenue was 0.36 billion, down 10.3%; net profit attributable to mother was 0.05 billion, down 46.8%; net profit not returned to mother was 0.05 billion, down 41.5%;

24Q1-3's revenue was 1.07 billion, down 4.2%; net profit attributable to mother was 0.19 billion, down 20.1%; net profit not attributable to mother was 0.19 billion, or 17.1%;

24Q1-3 gross profit margin of 52.7%, same increase of 2.3 pct, net profit margin 17.8%, same decrease of 3.5 pct.

There is an upward trend in the price of 2024Q3 bulk raw materials, and the company's advantages on the supply side, product design side, and brand side can maintain a stable level of the company's gross profit level and net profit level.

The company will continue to reasonably maintain raw material prices through measures such as supplier sourcing and optimization, centralized bargaining and procurement, while maintaining gross margin levels in line with the company's expectations through technological innovation and upstream penetration.

The cost ratio for the first three quarters was within a manageable range, in line with the company's expectations; the fourth quarter will be controlled according to real-time conditions, and efforts will be made to maintain a stable profit margin throughout the year.

Committed to omni-channel layout and intelligent product upgrade

Channel side: Adhere to the omni-channel sales model, develop online and offline collaboratively, and strengthen the integration of marketing resources. The share of online sales revenue and volume is still higher than offline sales. The company will continue to further cultivate and refine the sales network and deepen the management of a full-link, accurate and efficient three-dimensional channel system.

Offline channels, deeply cultivate traditional dealer channels, help leading markets break the game by empowering terminal retail improvements, cover more empty cities through active layout of sinking markets, and improve the quality of channel operation.

Online channels stabilize the market share of traditional e-commerce channels, and at the same time accelerate breakthroughs into new platforms such as Douyin. On the one hand, they increase customer stickiness and instant information interaction, and on the other hand, shape the brand's youthful image. Continuously improve channel management efficiency through continuous deepening of omni-channel marketing management.

Product side: Smart products account for more than 85% of sales. The company continues to upgrade its products to meet consumer needs, and the share of sales of smart products has met the company's expectations. The company will continue to keep abreast of user needs and rationally plan the product structure.

“Trade-in” is gradually being implemented

The current progress of the “trade-in” campaign varies due to differences in online and offline channels and regional subsidy policies. Online channels in the drying industry are progressing rapidly, mainly due to convenient government communication and platform support. However, the interface between the platform and the government subsidy system is mixed. Tmall and JD have already received subsidies, and Douyin and Pinduoduo have yet to connect. There are various subsidy standards and conditions for offline channels, and the company is trying to open up internal chains to empower offline stores.

Adjust profit forecasts to maintain “buy” ratings

Based on 24Q1-3 performance, the overall domestic real estate environment is under pressure. We adjusted our profit forecast. We expect EPS to be 0.7, 0.8, and 0.9 yuan (original values were 0.8, 0.9, and 1.1 yuan) for 24-26, and PE was 20X/19X/16X, respectively.

Risk warning: risk of changes in global trade policies; risk of changes in market consumption preferences; risk of market competition; risk of seasonal market fluctuations; risk of overseas operations, etc.