2023Q1 performance is under pressure. It is recommended to focus on new high-capacity and household energy storage products, maintain the “buy” rating of 2023Q1 to achieve operating income of 448 million yuan (-26.77%), net profit of -0.3 billion yuan (-140.45%), after deducting non-net profit - 46 million yuan (-163.24%). The impact of the base during the same period and the normalization of the current energy crisis led to a decline in revenue, the long-term effects of fluctuations in raw material prices and cost increases during the period. Considering that high-price inventory clearance supported subsequent gross margin stabilization, the brand effect helped independent stations and offline retail channels grow rapidly after cost investment was effective, and the product-side layout lays out large capacity and new household energy storage products. We maintain the 2023-2025 earnings forecast. The estimated net profit returned to the mother in 2023-2025 is 4.80/694/931 million yuan, corresponding to EPS of 5.00/7.23/9.70 yuan. The current stock price corresponding to PE is 24.7/17.1/12.7, doubling the “buy” rating.

Offline retail channels grew steadily. Online channels were pressured by the base and economic environment during the same period, etc. 2023Q1, when the revenue share of independent websites and offline retail channels was 20.76%/32.88% respectively, +0.61 pct/+12.03pct respectively over the previous year, and the revenue of independent sites/offline retail channels was -24.6%/+15.5% year-on-year. It is estimated that 2023Q1 third-party e-commerce platform revenue was 208 million yuan (-42.46%) based on revenue from independent sites and offline retail channels. In terms of independent stations, 4 new sites were added in Australia, France, Italy, and Spain, and a total of 12 sites were added. On the offline side, it has entered more than 6,000 world-renowned retailer stores.

High-priced inventories put pressure on 2023Q1 gross margin, and the cost rate increased 2023Q1 gross profit margin by 41.49% due to expansion of personnel scale, etc., to -6.73 pct year on year, +0.67 pct month-on-month. On the one hand, the sharp decline in comparison was due to the fact that high-priced inventories had not yet been cleared; on the other hand, increased competition in the industry caused the company to increase its promotional efforts. On the cost side, the 2023Q1 sales/management/R&D/finance expense ratio was 36.14%/11.5%/9.24%/-3.32%, respectively, and +14.83pct/+7.79pct/+5.67pct/-5.88pct respectively over the previous year. The increase in the number of personnel led to an increase in the cost rate in the current period. The number of management personnel was +39.96% compared to the same period, and related expenses were +158.48%/+70.79% year-on-year due to the increase in sales and R&D personnel. The decline in the financial expense ratio was mainly due to an increase in interest income. Under the combined influence, the 2023Q1 net interest rate was -6.62% (-18.6pct), after deducting the non-net interest rate was -10.19% (-21.99pcts). Looking ahead, it is recommended to focus on stabilizing gross margin after high-priced inventories are removed, and new products driving revenue improvements and cost dilution.

Risk warning: industry competition intensifies; battery cost rises; channel expansion falls short of expectations, etc.