Main points of investment

Affected by weak consumption in overseas markets and high inventory, the company's operating income in the first half of 23 was 912 million yuan, down 40.84% from the same period last year, and its net profit was 104 million yuan, down 70.21% from the same period last year. Mainly due to geopolitical conflicts, inflation and other factors, the prosperity of overseas terminal market is weak, consumer demand is insufficient, the digestion rate of high inventory in the channel is slow, and the company's business situation is negatively affected accordingly.

The expansion project is progressing smoothly, the overseas market has long-term development potential and great capacity expansion, and the company's subsidiary infrastructure project is progressing smoothly. The Bafang Tianjin electric vehicle drive system manufacturing project plant was completed in June and has now been put into use. The Bafang new energy lithium battery pack and high-end drive system manufacturing project is expected to be put into use by the end of the year and will become the production and operation base of the wholly-owned subsidiary octagonal new energy and express electric in the future. In terms of customers, the company currently has business cooperation with Emma, Yadi, Mavericks, No. 9 and Giant, including cooperation with Cosmoelectric and Giant customers in electric bikes, which is expected to further improve the penetration of domestic electric bikes. In the long run, there is still great room for improvement in overseas market penetration, and the company's performance is expected to recover in the future.

The company has set up a number of overseas subsidiaries to strengthen the service capacity of overseas markets, and has set up subsidiaries in major regions of the United States and Europe, among which Polish subsidiaries have a certain production capacity. it can avoid the risks caused by some changes in European and American trade policies towards China. The company relies on subsidiaries to further strengthen services, jointly develop and design with customers, develop and innovate according to customer needs, and employ overseas employees to implement "localized after-sales service" in the European market. The company takes the Netherlands as the first site to launch and actively promote the DDS (direct-to-dealerservice) dealer direct service system project. By the end of June, the dealer website has been officially opened to the public, and has been introduced into a number of customers.

Profit forecast and valuation

Downgrade earnings forecast and maintain "buy" rating. The global electric bicycle motor leader accelerates the layout of the domestic two-wheeler market. Taking into account the slowdown in overseas terminal consumer demand, we downgrade the company's profit forecast for 23-25. It is estimated that the net profit for 23-25 is 2.96,4.41 and 598 million yuan (before the reduction in 23-25 is 6.28,8.36 and 1.04 billion yuan respectively), corresponding to EPS is 1.76,2.63,3.56 yuan per share, and the corresponding PE of the current stock price is 32,21,16 times respectively. Maintain a "buy" rating.

Risk hint

The recovery of demand in overseas markets is not as expected, the progress of inventory removal is not as expected, and market competition aggravates the risk.