Event: the company issued a letter of inquiry on convertible bonds to reply that the funds to be raised by this issue of convertible bonds will not exceed 499 million yuan, of which 225 million yuan will be used for the annual production project of 60,000 riding lawn mowers, 126 million yuan will be used for the annual production project of 220000 new energy garden machinery products, and the remaining 148 million yuan will be used to replenish the flow.
Sufficient momentum for growth: "on hand + intention" sales contracts are abundant, capacity release breaks the bottleneck of growth.
Core customers: the company established a cooperation with home retail giant The Home Depot Inc in 2020 to manufacture fuel lawn mowers for it; at present, its own brand GreenMachine, which focuses on high-power lithium battery OPE, enters Home Debao online platform for sales, filling The Home Depot Inc layout vacancy, and is expected to enter offline channels in the future. 22Q1 The Home Depot Inc has become the company's largest customer.
The volume of the riding lawn mower is just around the corner. According to Arizton, total shipments in the global market for riding lawnmowers will grow by 32 per cent between 2019 and 2025. The company's riding lawn mower was finalized in June 22 and will enter the volume stage in the second half of the year.
There are abundant intentional contracts, and capacity release and order growth complement each other: as of July 28, the company's orders for new energy garden machinery products totaled 101 million yuan, with more than 700000 units of intentional contracts (including more than 200000 lithium electric lawnmowers and more than 500000 handheld products); riding lawnmowers worth 25 million yuan and intentional contracts of more than 50,000 units.
According to the average price of the order in hand, if all the intentional contracts are landed, the income is expected to exceed 1.039 billion yuan. The company's current capacity utilization rate is close to 100%. In the future, the company's IPO and convertible bond raising projects will be put into production, which is expected to break the growth bottleneck.
The logic of profit recovery is further strengthened: the improvement of 22Q1 profit margin is mainly due to the price increase of products, and the recent improvement in cost-side exchange rate and sea freight.
Sea freight decline: under the overseas warehouse pick-up mode, the proportion of sea freight in revenue of 2021 and 22Q1 companies increased to 4.0% and 6.6%, respectively. As the shipping tension eased, the SCFI index fell 23.9% from the high at the beginning of the year, 7.3% lower than the same period last year, and entered the year-on-year improvement range.
RMB exchange rate depreciation: the average 22Q2 dollar exchange rate against RMB exchange rate is about 6.61%, which is + 2.3% compared with the same period last year. We predict that under the neutral assumption (assuming that the average exchange rate of August-December is 6.7, and the exchange rate is weighted by the monthly export volume of lawn mowers), the exchange rate depreciation in 22 years is 1.80%. Based on the 2021 data, the company's non-net profit deduction is expected to increase by 63.9%, releasing profit elasticity.
Investment suggestion: as a leading supplier in the domestic OPE industry, Daye shares have sufficient orders after Depot, capacity expansion planning is gradually landing, riding lawn mower volume is just around the corner, growth has certainty. We estimate that the company's revenue in 22-24 will be RMB 20.2 billion, an increase of RMB 3.33 billion, an increase of 25.5%, 32.5%, 24.5%, and a net profit of RMB 1.4 million, 2.3 million, and 160.2%, 61.6%, 44.4% respectively, corresponding to PE 25X/15X/11X. Give a rating of "overweight".
Risk tips: shipments of riding lawnmowers fall short of expectations; cooperation with core customers falls short of expectations; and the political situation changes more than expected.
