Huabao Xinneng disclosed the 2022 annual report and the 2023 quarterly report. The company achieved revenue of 3,203 billion yuan in 2022, +38.35% year on year; net profit of the mother was 287 million yuan, +2.64% year on year. 22Q4 achieved revenue of 973 million yuan, +26.32% year on year, +6.37% month on month; Guimu's net profit was 32 million yuan, -52.01% year on year and -66.21% month on month.

2023Q1 achieved revenue of 448 million yuan, -26.77% year on year and -53.94% month on month; net profit of the mother was -30 million yuan, -140.45% year on year, 193.10% on month. In terms of profit level, the company's gross profit margin in '22 was 44.32%, -3.03 pcts year on year; net profit margin was 8.95%, year on year -3.11 pcts; 23Q1 gross profit margin was 41.69%, -6.73 pcts year on year; net profit margin was -6.62%, -18.6 pcts year on year. The year-on-year decline in gross margin was mainly due to the company's high-cost inventory and product promotion price reductions.

The decline in revenue combined with pre-investment put pressure on the 23Q1 performance in the short term. After the investment paid off, it is expected that the company's market share will continue to rise. The reason for the year-on-year decline in the company's 23Q1 revenue was due, first, to factors such as the outbreak of the Russian-Ukrainian war in the same period last year, which had a high overseas revenue base; second, factors such as the concentrated release of overseas consumption at the end of '22 and the decline in demand for commodities from major countries around the world affected Q1 consumption. In addition, the company's 23Q1 expense level also increased dramatically, which affected the profit margin level. Among them, the 23Q1 company's sales/management/R&D expenses ratio was 36.2%/11.6%/9.2%, an increase of 8.7 pcts/7.3 pcts/5.5 pcts respectively compared to '22. This is mainly due to factors such as the company increasing brand promotion and offline advertising efforts, strengthening localization and official website operation team building, and continuing to increase investment in R&D. It is expected that as the brand continues to be built and early investment will form an important support for the company's performance in the future, I am optimistic about the company's subsequent development potential.

With a comprehensive online and offline layout, the level of customer stickiness and channel deployment continues to improve. The company continues to deepen the omni-channel layout of “independent brand websites, third-party e-commerce platforms, offline retail”. Since 2020, the share of the company's brand's official website and offline retail revenue has continued to increase. The brand's official website revenue in '22 was 682 million yuan, +97.4% year on year, accounting for 21.3%, +3.9pcts year on year; 23Q1 accounted for 20.8%, +0.6pcts year on year, and added four independent websites for global brands in Australia, France, Italy and Spain, and customer stickiness increased significantly. In addition, the company's offline revenue in '22 was 808 million yuan, +153.9% year on year; 25.2%, +11.5pcts year on year; 23Q1 accounted for 32.9%, up 12.0 pcts year on year. Currently, the company has entered more than 6,000 world-renowned retailer stores. Increased customer sticking+channel development level will continue to enhance the company's competitiveness.

A leading portable energy storage product company has entered the household energy storage industry. In 2022, the company's portable energy storage products achieved revenue of 2.47 billion yuan, +34.4% year on year, accounting for 77.0%, and gross profit margin of 43.9%. Currently, the company is building two global brands of “Jackery Electric Power” light-charging outdoor power supply and “Geneverse” household photovoltaic energy storage; it was the first to launch new photovoltaic fast charging products and Homepower ONE Pro for mobile emergency home energy storage in 2022; and is currently developing high-capacity 3-20 kWh household energy storage products to build a second growth curve. 23Q1 The company continued to invest in research and development and accelerated the launch of new portable energy storage and household energy storage products. By the end of last year, the company had a production capacity of 1.62 million units, and will use 198 million yuan to raise capital to expand production of portable energy storage products. The rise in production capacity is expected to drive a further increase in performance.

Profit forecast and valuation: The company is a leader in portable energy storage products and will enter the household energy storage industry in the future. We expect the company to achieve net profit of 4.8, 770, and 1.20 billion yuan respectively in 2023-2025, up 68.2%, 59.9%, and 55.8% over the previous year. The corresponding PE was 21.1/13.2/8.5 times. Maintain an “increase in holdings” rating.

Risk warning: industry competition intensifies; downstream demand falls short of expectations; new product development falls short of expectations, etc.