Incident: The company released its 2022 annual report, achieving annual revenue of 2.85 billion yuan (+7.66% year-on-year), net profit of 512 million yuan (-15.58% year-on-year), and net profit of 511 million yuan (-7.43% year-on-year) after deduction. Looking at a single quarter, 22Q4 achieved revenue of 471 million yuan (-37.17% YoY, -43.7% YoY), net profit of 38 million yuan (-78% YoY, -69% YoY), and net profit of 36 million yuan (-71% YoY, -72% YoY).
Gross margin increased month-on-month, and the cost rate for the period increased month-on-month. 22Q4 gross profit margin 30.04% (+2.47pct month-on-month), net profit margin 8.03% (-6.77pct month-on-month), sales expenses ratio 6.85% (+2.89pct month-on-month); management expense ratio 4.83% (+1.72pct month-on-month), financial expenses rate 0.11% (+1.82pct month-on-month), R&D expenses 3.93% (+0.98pct month-on-month). Product profit margins have increased slightly, and sales of integrated motors and batteries have increased. By product, electric scooter motors achieved sales revenue of 1,367 million yuan (-11.3% year on year), gross profit margin of 48.8% (+1.2pct year on year), of which 510,000 mid-mounted motors were sold (-7.7% year on year), wheel motors sold 1.13 million units (-28% year on year); integrated wheel motors achieved sales revenue of 781 million yuan (+64% year on year), gross margin of 5.3% (+1.2pct year on year), sales of 4.135,000 units (+44.6% year on year); batteries achieved sales revenue of 1.80 million units (+9.617 billion yuan over year) , gross profit margin 17.66% (+0.75pct year over year).
The long-term growth trend of the European market continues, and the domestic market is poised to develop. (1) Continued growth in overseas markets: European electric scooter sales reached 5.1 million units in 2021, an increase of 12.3% over the previous year, and the market penetration rate was about 23.2%. Despite the severe macro situation in 2022, e-bike sales in some countries showed resilience. For example, sales in the Netherlands increased 1.67% year over year. Looking at the long term, Europe has a long cycling culture, the energy crisis has intensified, government subsidies have increased, and the electric bicycle market still has potential for development. Although the US market started late, sales were 1.14 million units in 2021, an increase of 40.7% over the previous year, and the penetration rate increased to 3.8%. Considering the US policy and low penetration rate, the US market has a lot of room for development.
(2) The domestic market is on the rise: China's e-bike market is still in its infancy. With the “carbon peak and carbon neutrality” goals proposed, the “Green Mobility “14th Five-Year Plan” clarifies the direction of green travel. The electric bicycle market is expected to usher in rapid development opportunities, and the future development potential of the domestic e-bike market is optimistic.
Investment advice: We expect the company's net profit to the mother in 2023-2025 to be 687/841/1,003 million yuan respectively. The corresponding PE will be 17/14/12 times respectively, covered for the first time, and rated as an increase in holdings.
Risk warning: promotion of new products falls short of expectations, upward pressure on raw material prices, uncertain demand due to worsening macroeconomic conditions overseas, etc.