Key points of investment:

Considering that Q1 performance expectations are slightly lower and industry competition is fierce, we lowered our profit forecast. We expect EPS to be 0.76/0.83/0.88 yuan (original value 0.79/0.86/0.95 yuan, adjusted -5%/-4%/-8%) in 2024-2026, with a growth rate of +25%/+9%/+7%. Referring to the same industry, and based on prudential considerations, the company was given 24xPE in 2024, the target price was lowered to 18 yuan, and the “prudent increase” rating was maintained.

Performance summary: The company's performance is slightly lower than expected. The company achieved operating income of 348 million yuan in 2024Q1, -15.44% year-on-year, and net profit to mother of 37 million yuan, or -24.52% year-on-year.

Revenue performance was slightly better than the industry, and the company's performance was slightly lower than expected. The average price of the integrated stove category is high, increasing the purchasing threshold for consumers. As consumer purchasing power slowly recovers, overall sales are relatively sluggish. As a leading enterprise, the company's revenue performance is slightly better than the overall level of the industry. At the performance level, 2024Q1's gross margin was 45.65%, -1.23pct year on year, and the net margin was 11.21%, and -0.6pct year on year; we expect fluctuations in raw material prices to be an important reason for the decline in the company's gross margin. The company's 2024Q1 sales, management, R&D and financial expense ratios were 23.16%, 7.63%, 6.95%, and -1.77%, respectively, -0.09, +0.29, +1.14, and -0.95pct. The company's expense ratio remains stable.

Looking ahead, considering the company's active online sales and dealer support strategy, the subsequent growth rate is expected to outperform the industry.

Risk warning: Risk of fluctuations in raw material prices, intensifying industry competition.