Incidents:
The company released its annual report: In 2022, the company's revenue was 1,472 million yuan, a year-on-year decrease of 8.43%; realized net profit attributable to the mother/net profit after deducting the return to the mother was 0.11/027 million yuan respectively, a year-on-year decrease of 79.74%/12.96%, respectively.
Among them, the company achieved revenue of 144 million yuan in the Q4 single quarter, a year-on-year decrease of 65.28%; the net profit achieved by returning to the mother/net profit after deducting the return to the mother was -0.55/-47 billion yuan respectively.
Demand for terminals is weak due to the severe macroeconomic environment overseas. There are signs that the product structure has been optimized. The company mainly exports. Affected by high inflation and extreme hot weather in Europe and the US, market demand slowed in 2022. Looking at a single quarter, the company's Q1-4 revenue increased and decreased by 47.21%/-17.93%/-19.87%/-65.28%; corresponding Q1-3 net profit increased and decreased by 49.92%/-37.92%/-204.08% year on year, and Q4 losses increased year on year. By product, the company achieved revenue of 12.45/0.16/1.10/98 billion yuan respectively in 2022 for lawnmowers/lawnmowers and brush cutters/other power machinery/accessories, an increase of -3.02%/-66.01%/-7.74%/-36.61%, respectively. Among them, the revenue share of lawn mowers products increased further, reaching 84.62% (yoy+4.72pct). Looking at volume and price splitting, the company's garden machinery sales fell 28.36% year-on-year in 2022, and the price of a single unit increased 27.81%, reflecting the continuous optimization of the company's product structure.
Q4 In terms of improving profitability and increasing sales and R&D investment to promote growth and profitability, the company's gross margins and net profit margins to the mother in 2022 were 16.17%/0.76%, respectively, and +0.85/-2.69pct respectively over the previous year. Looking at a single quarter, Q4 gross profit margin was 16.65%, up from Q3 (+2.42pct), and profitability picked up. In terms of period expenses, the company's sales/management/finance/R&D fee rates for the full year of 2022 were 5.53%/4.81%/-0.83%/4.30%, respectively, and +1.91/+1.27/-2.62/+1.23pct respectively. Among them, the increase in sales rates was mainly due to the company's active market development and promotion of new products in the US. The management expense ratio was mainly affected by depreciation of fixed assets and equity incentive expenses, and the reduction in financial expenses was due to the impact of exchange profit and loss; the increase in R&D investment was mainly due to the increase in riding mowers and new energy garden machinery Investment in research and development of new products such as products.
Emerging products are expected to continue to be released. With the expansion of production capacity, future growth can be expected on the channel side. The company is deeply tied to core major customers such as Home Depot and Walmart, and channel sales advantages are remarkable. On the product side, the ride-on mower products developed independently by the company entered the stage of mass production and mass sales in 2022. They have been recognized by customers, and it is expected that they will continue to be sold in the future. On the production capacity side, the company has begun construction of an overseas Mexican production base for the production of garden machinery products; at the same time, the convertible bond project has been approved. Among them, the addition of 60,000 ride-on lawnmower products and 220,000 new energy garden machinery product projects will further open up the company's production capacity ceiling.
Investment advice and profit forecasting
The company is a leading lawn mower company. Benefiting from its own strong channel barriers, the acceleration of the industry's lithium electrification process, and the continuous implementation of its own production capacity, compounded by the fact that overseas demand is expected to pick up, its performance is expected to continue to grow. We expect the company to achieve revenue of 1,923/24.45/3,055 billion yuan respectively in 2023-2025, net profit of 0.96/148/212 million yuan, EPS of 0.60/0.93/1.32 yuan, and corresponding PE of 27.95/18.19/12.74 times, maintaining the “buy” rating.
Risk warning
Trade environment risk, macroeconomic risk, risk of customer concentration, risk of overseas market expansion falling short of expectations