Quarterly results: 23Q1 achieved revenue of 448 million, -27%, or -54%; net profit returned to the mother was -30 million, same -140%, and -193%; after deducting -46 million, same -163%, same as -163%, Huan -243%. In 23Q1, the company's gross margin reached 41.7%, +0.7pct; net profit margin reached -6.6%, Huan -9.9pct. Revenue growth in Europe exceeded expectations, and new markets such as Australia/South Korea were deployed ahead of schedule.

Revenue side: The traditional off-season is compounded by a high base, strategically delaying the launch of new products. Due to the concentration of online and offline promotions in Q3-Q4, Q1 is the traditional low season for overseas consumption (and 22Q1 overseas energy storage products have a high revenue base stimulated by the energy crisis). At the same time, based on the judgment and tracking of the general environment where consumption slowed in Europe and the US in 23Q1, the company strategically delayed the launch of new products. Channel construction and regional promotion achieved results: Q1 offline retail revenue was 150 million yuan, bucking the trend 15% year on year, accounting for 33% (same +25pct, ring +3pct), entering more than 6,000 world-renowned retail stores (4,000 + at the end of '22); revenue from independent websites of official websites was 90 million yuan, down 25% from the previous year, accounting for 21% (same +4pct, ring +1pct). Q1 added 4 independent websites for global brands (8 at the end of 22). Compared to third-party e-commerce platforms, offline retail and independent websites have lower processing fees, advertising fees, etc., which is expected to contribute positively to the increase in net sales interest rates.

Expense side: Systematically build brands/expand channels, and upfront investment affects net interest rates at the stage.

The company's upfront investment to expand brands, markets, and channels is relatively rigid in terms of seasonal allocation, and phased revenue fluctuations have an apparent impact on the dilution of cost rates. 23Q1 increased brand promotion, offline advertising, localization teams, official website operation teams, etc., as well as R&D investment in new products and core components. Sales/management/R&D expenses were 1.62/0.52/41 million yuan respectively, up 24%/127%/90% year-on-year, with the same cost ratio of +14.8/7.8/5.7pct and +4.9/6.3/4.3pct, which affected short-term profit margins. Brand building requires long-term and systematic investment, and the impact on performance is lagging behind. It will promote the penetration rate of portable energy storage products and increase the company's market share in the medium to long term.

Profit forecast and valuation: Revenue is expected to reach 65.3/990/12.67 billion yuan respectively in 2023-25, and net profit of the mother will reach 72/1,18/1.85 billion yuan respectively. Corresponding to the current market capitalization PE is 17/10/6 times, maintaining the “buy” rating.

Risk warning: The recovery in global consumption fell short of expectations, and market competition intensified.