BEAR APPLIANCE(SZ:002959) Guotai Junan Securities·2024-11-03 08:17Investment Rating - The report maintains a "Buy" rating for the company with a target price of 51.00 CNY, reflecting a 25x PE for 2024 [1][12]. Core Views - The current industry demand is weak, and the competitive landscape is still in the process of clearing out. However, it is expected that as tail-end brands exit the market, the industry structure will improve, leading to a potential recovery in the company's revenue growth [2][12]. Summary by Sections 1. Investment Recommendation - The company is rated as "Buy" with a target price of 51.00 CNY, based on a revised EPS forecast of 2.02/2.28/2.49 CNY for 2024-2026, reflecting a downward adjustment of approximately 20% [1][12]. 2. Performance Overview - For the first three quarters of 2024, the company reported a revenue of 3.139 billion CNY, a year-on-year decrease of 5.4%, and a net profit of 180 million CNY, down 42.91% year-on-year. In Q3 2024, revenue was 1.008 billion CNY, up 3.17% year-on-year, while net profit was 19 million CNY, down 75.6% year-on-year [13][12]. 3. Export Performance vs. Domestic Sales - The company’s export performance has outpaced domestic sales, with Q3 exports expected to grow by 40% year-on-year due to previous overseas expansion efforts. In contrast, domestic sales are projected to decline by double digits due to a slow recovery in overall industry demand [14][12]. 4. Short-term Decline in Net Profit Margin - The gross margin for Q1-Q3 2024 was 35.62%, down 3 percentage points year-on-year, and the net margin was 5.95%, down 3.56 percentage points year-on-year. The decline in gross margin in Q3 2024 to 33.34% is attributed to the consolidation of Roman, alongside intensified competition leading to price reductions [15][12]. 5. Adequate Cash Reserves but Declining Operating Cash Flow - As of Q3 2024, the company had cash and cash equivalents plus trading financial assets totaling 2.477 billion CNY, a decrease of 280 million CNY year-on-year. The net cash flow from operating activities was 4 million CNY, down 230 million CNY year-on-year [16][12].