Breo(688793) 国投证券·2024-10-30 05:23Investment Rating - The investment rating for the company is maintained at "Buy-A" with a 12-month target price of 40.73 CNY per share [4]. Core Views - The company reported a revenue of 840 million CNY for the first three quarters of 2024, a year-on-year decrease of 11.2%, and a net profit of 13.1 million CNY, recovering from a loss of 16.3 million CNY in the same period last year. However, Q3 revenue was 230 million CNY, down 31.9% year-on-year, with a net loss of 130.3 million CNY, a decline of 244.6% year-on-year. The decline in Q3 revenue is attributed to weak domestic consumer demand and a high base from the previous year [1][2][3]. Summary by Sections Financial Performance - Q3 gross margin improved to 66.8%, an increase of 2.9 percentage points year-on-year, due to adjustments in sales strategy and product structure optimization [2]. - The net profit margin for Q3 was -5.6%, a decrease of 8.2 percentage points year-on-year, primarily due to reduced revenue and fixed marketing expenses. The expense ratio increased by 13.0 percentage points year-on-year [2][3]. - Operating cash flow turned negative in Q3, with a net outflow of 40 million CNY, compared to a positive cash flow of 10 million CNY in the same period last year [2]. Industry Outlook - The small massage device industry has strong growth potential, with significant room for scale and concentration improvement. The company has over 20 years of industry experience and possesses notable advantages in products, channels, and brand, positioning it to lead industry development [3]. - As consumer demand gradually recovers and new products are launched, the company's operational performance is expected to show significant elasticity [3]. Earnings Forecast - The company is projected to achieve earnings per share (EPS) of 0.32 CNY, 1.36 CNY, and 1.74 CNY for the years 2024, 2025, and 2026, respectively [3].