Core Viewpoint - TCL Smart Home reported a revenue of 14.35 billion yuan for the first three quarters of 2025, a year-on-year increase of 2.9%, and a net profit attributable to shareholders of 980 million yuan, a year-on-year increase of 18.5% [1] Revenue Performance - In Q3, the company achieved a revenue of 4.87 billion yuan, a year-on-year decrease of 2.3%, while the net profit attributable to shareholders was 340 million yuan, a year-on-year increase of 27.5% [1] - The external sales performance remained stable, while internal sales faced pressure, leading to a slight decline in quarterly revenue [1] - External sales volume for refrigerators (Ouma + TCL) increased by 0.2% year-on-year, while washing machines saw a significant increase of 43.4% year-on-year [2] Internal Sales Challenges - Internal sales volume for refrigerators decreased by 20.2% year-on-year, and washing machines saw a decline of 36.5% year-on-year, attributed to a shift in consumer preference towards mid-to-high-end products due to national subsidies [2] - The company plans to enhance product competitiveness through R&D and introduce new mid-to-high-end products to expand into emerging markets [2] Profitability Improvement - The net profit margin for Q3 was 7.0%, an increase of 1.6 percentage points year-on-year, driven by a 3.3 percentage point increase in gross margin [2] - The reduction in operating expense ratio by 1.7 percentage points, including decreases in financial and management expense ratios, contributed to improved profitability [2] Cash Flow and Financial Position - Operating cash flow for Q3 was 560 million yuan, showing stability with a slight year-on-year decrease [3] - The total cash and financial assets amounted to 5.38 billion yuan, a year-on-year increase of 35.3%, indicating a strong cash position [3] - Contract liabilities increased by 19.2% year-on-year to 440 million yuan, reflecting positive payment intentions from distributors [3] Investment Outlook - TCL Smart Home is positioned as a leading refrigerator exporter in China, focusing on global expansion and brand promotion in emerging markets [3] - The company is accelerating its smart transformation and optimizing production chains, which is expected to enhance profitability [3] - EPS forecasts for 2025, 2026, and 2027 are 1.10 yuan, 1.22 yuan, and 1.37 yuan respectively, with a target price of 13.20 yuan per share based on a 12x PE ratio [3]

Investment Rating - The investment rating for TCL Smart Home is maintained at "Buy-A" with a target price of 12.43 CNY per share, reflecting a 6-month outlook [5][4]. Core Views - TCL Smart Home reported a revenue of 9.48 billion CNY for the first half of 2025, representing a year-over-year increase of 5.7%, and a net profit attributable to shareholders of 640 million CNY, up 14.2% year-over-year [1]. - The company continues to experience growth in overseas sales, with a year-over-year increase of 9.0% in the first half of 2025, driven by strong performance in Southeast Asia, Latin America, and the Middle East [2]. - Domestic sales faced challenges, declining by 3.6% year-over-year in the first half of 2025, influenced by national subsidies and intense online price competition [2]. - The company is focusing on enhancing product competitiveness through R&D and launching high-end products, which is expected to improve revenue growth in the future [2]. Financial Performance Summary - In Q2 2025, TCL Smart Home achieved a revenue of 4.88 billion CNY, a year-over-year increase of 2.4%, and a net profit of 340 million CNY, up 0.8% year-over-year [1]. - The net profit margin for Q2 was 6.9%, slightly down by 0.1 percentage points year-over-year, primarily due to a decrease in gross margin and changes in foreign exchange losses [3]. - Operating cash flow for Q2 increased significantly to 790 million CNY, a year-over-year rise of 125.1%, attributed to improved cash collection capabilities [3]. - The company is projected to have earnings per share (EPS) of 1.04 CNY, 1.15 CNY, and 1.28 CNY for the years 2025, 2026, and 2027 respectively [4].