Event: The company released its 2024 quarterly report. 2024Q1 achieved operating income of 127 million yuan, or -44.49% year on year; realized net profit to mother of 205 million yuan, -88.88% year over year.

The volume of the integrated stove industry has plummeted, and the company's retail side is under pressure in the short term. Affected by changes in the real estate environment and consumption downgrade, the 2024Q1 integrated stove industry continues to be under pressure. According to Aowei Cloud, the cumulative retail sales volume and volume of China's integrated stove market in the first quarter of 2024 were 4.2 billion yuan and 450,000 units, respectively, falling 11.9% and 10.5% respectively. Affected by the industry, the retail side of Yitian Smart also experienced a decline. According to Aowei Cloud Network, the online sales growth rate of the 2024Q1 Yitian Smart was -45.77%.

The sharp decline in revenue affected short-term profit margin levels. Gross profit margin: 2024Q1 companies' gross margin -4.84pct year-on-year to 44.64%. Rate side: The 2024Q1 sales/management/R&D/finance rate was 29.76%/9.57%/7.33%/-1.45%, with a year-on-year change of 9.94pct/4.19pct/1.75pct/0.4pct. The change in financial expenses was mainly due to an increase in interest on convertible bonds. Net interest rate: The company's 2024Q1 net interest rate changed year-on-year - 14.25pct to 3.57%. At the same time, changes in net interest rates were also affected by increased asset impairment losses. In 2024Q1, the company added 1.28 million yuan in asset impairment losses, mainly due to preparation for inventory price reductions.

Short-term cash flow is under pressure. The net cash flow from the company's operating activities in 2024Q1 was 375,900 yuan, -98.84% year-on-year, mainly due to a decrease in cash received from sales of products. 2024Q1 received 103 million yuan in cash from sales of products, a year-on-year decrease of 60.56%.

Profit forecasting and investment advice. Considering the company's performance in the first quarter of 2024 and the overall environment of the integrated stove industry, we expect the company to achieve net profit of 1.81/1.99/213 million yuan in 2024-2026, an increase of 1.2%/9.6%/7.3% over the previous year, and maintain the “increase” investment rating.

Risk warning: Fluctuations in raw material prices, fluctuations in the real estate market, and increased market competition.