The company released a three-quarter report

The company's 24Q3 revenue was 0.896 billion, a decrease of 13.91%; net profit of 0.05 billion to mother decreased by 44.22%, and net profit of 0.042 billion was reduced by 36.14%, due to phased pressure on the real estate industry, year-on-year decline in operating income, increased interest expenses generated by the company issuing convertible corporate bonds, and the company's implementation of new retail and overseas strategies is still in the investment period. There are many rigid costs such as upfront expenses and employee compensation and benefits.

24Q1-3's revenue of 2.416 billion decreased by 5.15%, net profit of 0.12 billion to mother decreased by 28.09%, and the decline in profit was greater than revenue. This was an increase in interest expenses arising from the company's issuance of convertible corporate bonds in 2023. At the same time, the company's implementation of new retail and overseas strategies is still in the investment period, and rigid costs such as upfront expenses, employee remuneration and benefits are high. The home improvement, luggage, domestic reform, and overseas businesses achieved relatively rapid growth in the first three quarters; At present, the company's new retail strategy, overseas strategy and business model have been implemented, and the benefits are gradually showing, which is expected to provide a strong guarantee for continued growth in performance.

The 24Q1-3 company's gross profit margin was 27.30%, down 1.6 pct; the net profit margin was 4.75%, down 1.65 pcts.

Trade-in subsidy policies are being implemented one after another

In recent times, home improvement trade-in subsidy policies have been implemented one after another in various regions. For example, a single subsidy for home improvement, kitchen and bathroom “refurbishment” in Xiamen is 20%, up to a maximum subsidy of 0.02 million yuan. The subsidy is very strong, effectively activating the demand in the home improvement market and bringing real discounts to end consumers. Since October, as Guangzhou liberalized the scope of subsidies to the whole country, it has attracted great attention and good expectations in the market.

In response to national policies, the company actively communicated with the local government in Xiamen to quickly promote the implementation of the subsidy policy, while also actively opening up online platforms such as Tmall and Jingdong, so that more customers from all over the country can participate in enjoying the policy subsidy benefits. Driven by the trade-in subsidy policy, the company's terminal orders in the Xiamen region have recently increased by about 70% year-on-year. Terminal orders in other cities have also increased or improved to varying degrees, so continued attention is needed in the future.

Adjust profit forecasts and maintain buying ratings

Based on the company's 24Q1-3 performance, the real estate industry is under pressure and consumption uncertainty, we adjusted the profit forecast. The company's net profit to mother for 24-26 is 0.23/0.24/0.25 billion yuan (previous value was 0.29/0.32/0.36 billion yuan), respectively, and the corresponding PE is 15/14/13X, respectively.

Risk warning: macroeconomics affect demand; risk of raw material price fluctuations; channel expansion falls short of expectations.