Incident: The company released its 2022 annual report. In '22, the company achieved revenue of 2,850 million yuan, +7.66% year on year; net profit of the mother was 512 million yuan, -15.58% year on year. Among them, Q4 of '22 achieved revenue of 471 million yuan, -37.17% year on year and -43.80% month on month; the net profit of the mother was 38 million yuan, -78.10% year on year and -69.52% month on month.
As a result of changes in revenue structure, the company's profitability declined in '22. The company's comprehensive gross margin in '22 was 31.22%, -3.04 pct year on year; net interest rate was 17.97%, -4.95 pct year on year. The gross profit margin and net interest rate for Q4 '22 were 30.04%/8.03%, respectively, -4.22pct/-15.01pct, and +2.46pct/-6.78pct compared to the previous month. The gross margin of the company's electric scooters in '22 was 48.80% (+1.24pct year-on-year). The decline in overall profitability was mainly due to an increase in the share of integrated wheel motor revenue with a lower gross margin (5.31%).
The company has responded positively to the dual adverse effects of supply chain blockage and falling overseas demand, and is expected to usher in a significant recovery in '23. At the supply level, Suzhou, where the company is located, and the surrounding area were negatively affected by the COVID-19 pandemic in '22, and production and logistics faced challenges. At the demand level, the mid-range and high-end European electric scooter market maintained a high growth rate in '22, but due to the impact of the Russian-Ukrainian war and inflation, the growth rate of demand in the European middle and low end wheel motor market, which is more sensitive to prices, declined, while the US electric scooter market as a whole was in the “de-inventory” stage in '22. Faced with these adverse effects, on the one hand, the company coordinated to ensure product delivery; on the other hand, it improved internal management and focused on new market development. As the supply chain fully returned to normal in '23 and demand for electric bicycles from overseas gradually recovered, we think the company's operating performance is expected to recover.
The company actively launched new products and strengthened brand building. The company launched an internal three-speed automatic transmission in '22, which has a clear cost advantage over traditional transmissions. The company actively participated in various overseas exhibitions, sponsored bicycle teams to participate in sporting events, further enhanced the reputation of “bafang” in the industry, and strengthened its brand image.
Investment advice: Considering that the recovery of the overseas electric scooter market may be lower than expected, our profit expectations for the company have been lowered. The company's net profit for 23-25 is estimated to be 6.60/806/961 million yuan, +28.9%/+22.1%/+19.3% year on year, and the corresponding PE is 17.1/14.0/11.8, maintaining the “buy” rating.
Risk warning: risk of order delivery delays; demand in overseas markets falls short of expectations; market competition intensifies