Incident: The company released its three-quarter report. In the first three quarters of 24, it achieved operating income of 9.48 billion yuan, a decrease of 2.72%; net profit to mother of 0.73 billion yuan, a decrease of 36.42%; and net profit of non-return to mother of 0.82 billion yuan, a decrease of 31.04%.

The company's credit impairment loss for the first three quarters of 24 years was 80.97 million yuan, mainly due to increased preparation for bad debts. Non-operating expenses of 0.13 billion were mainly due to the closure or transfer of some stores to confirm compensation for losses.

Looking at a single quarter, 24Q3 achieved operating income of 3.13 billion yuan, a decrease of 6.23%; net profit to mother of 0.13 billion yuan, a decrease of 54.64%; and net profit of non-return to mother of 0.14 billion yuan, a decrease of 53.98%.

The consolidated gross margin for the first three quarters of 24 was 29.33%, a decrease of 5.7pct. The cost rate for the period was 21.22%, a decrease of 1.7 pct. Among them, the sales/management/ R&D/ finance ratio was 8.88%/3.93%/0.27%/8.14%, respectively, with a decrease of 0.9 pct/0.2 pct/0.2 pct/0.4 pct.

The company announced that in order to further focus on its main business and enhance its brand image, it plans to change the Chinese name from “Easyhome New Retail Group Co., Ltd.” to “Easyhome New Retail Group Co., Ltd.”, and the stock abbreviation from “Easyhome” to “Easyhome”. We believe that this name change highlights the company's development confidence in becoming a model for digital transformation and upgrading in China's commercial retail industry and an international benchmark. It helps the public to more clearly identify the company's professionalism and innovation in smart home products and services, and promote the transformation and upgrading of the company's business model.

Responding positively to the national call, the trade-in policy has significantly boosted the recovery of customer traffic in stores. Since mid-late August, the trade-in policy for household appliances has gradually been implemented in all provinces and cities across the country. The company has responded positively to the national call, cooperated with the government in policy promotion, and organized merchants to apply for government trade-in activities. By the end of September, the company's trade-in campaign had attracted 0.2283 million participants this year, directly driving more than 1 billion yuan in exchange spending.

During the 11th period, the number of customer orders in the Easyhome store increased by more than 20% over the same period last year. We believe that with the promotion of home trade-in policies across the country, it is expected to help unlock the potential of the home consumer market.

Profit forecast and rating: We lowered the company's net profit for 24-25 from 1.39/1.55 billion yuan to 1.03/1.13 billion yuan, respectively, with a year-on-year change of -21%/+10%. Referring to comparable companies, PE was given 17-19 times in 25 years, corresponding to a reasonable value range of 3.06-3.42 yuan/share, and given a “superior to the market” rating.

Risk warning: Terminal demand falls short of expectations, declining real estate cycle, risk of traffic fragmentation, new business development falls short of expectations.