BEAR ELECTRIC APPLIANCE CO. (002959.SZ) 3Q26 Earnings Review: Weak demand, shifting focus to mix and efficiency; Neutral

Bear Electric reported below-expectation 3Q26 results mainly dragged by weak demand post market close of Oct 26. Total revenue/net profit in 3Q26 was down 10%/25% yoy, which was -6%/-8% vs. GSe. GPM/NPM decreased by 1.0ppt/0.6ppt yoy to 36.1%/2.9% in 3Q26, in line with expectations, impacted by cost inflation and FX though partially offset by product mix improvements. Management held an earnings call on Oct 27 to address key topics on demand, product/channel strategy, overseas expansion and margins. We came away with the impression that: 1) In the domestic market, management continued to see sluggish demand and emphasized quality operations, including avoiding low-price competition, product mix upgrades and expense ROI improvements, as shown from ASP improvements in 3Q. Channel wise, management mentioned faster growth from Pinduoduo, but larger decline in JD due to a high base boosted by trade-in stimulus last year, similar to the previous quarter. 2) For the overseas business, managem