Event: Jiuqi Co., Ltd. released its 2023 three-quarter report. 2023Q1-3 achieved operating income of 1,553 billion yuan, a year-on-year decrease of 16.96%; net profit of 96 million yuan, a year-on-year decrease of 37.84%; net profit of non-retracted net profit of 84 million yuan, a year-on-year decrease of 42.28%. Among them, in 2023Q3, the company achieved operating income of 516 million yuan, an increase of 1.25% over the previous year; net profit of 43 million yuan, a decrease of 18.53% over the previous year; net profit after deducting net profit of 38 million yuan, a year-on-year decrease of 23.33%.
Actively develop cross-border e-commerce, and the Q3 revenue growth rate was corrected
Looking at each channel, 1) In terms of overseas offline channels, overseas inventory pressure still exists. The company actively participates in various product fairs at home and abroad, strengthens close communication with customers, further grasps customer needs, strengthens in-depth cooperation with customers, and provides customers with diverse products to maintain existing customers and actively develop new customers. 2) In terms of cross-border e-commerce channels, the company is vigorously developing online sales and independent brand business. Through various cross-border e-commerce platforms, such as Amazon, eBay, AliExpress, Shrimpi, Nazada, etc., it is expected that B2B and B2C business will continue to grow. Cross-border e-commerce revenue is expected to continue to rise.
Gross margin continues to rise. Apparent net margin is temporarily under pressure due to the high base of exchange earnings 2023Q1-3. The company's comprehensive gross margin was 14.82%, up 1.43pct year on year. Among them, 23Q3 company's comprehensive gross margin was 16.98%, up 2.90 pct year on year. The increase in gross margin of 23Q1-3 is mainly due to the increase in the share of cross-border e-commerce. In terms of period expenses, the period fee rate for 2023Q1-3 company was 8.05%, up 4.26pct year on year. Sales/management/R&D/finance expense ratio was 6.18%/1.68%/1.34%/-1.15%, respectively, +0.39/+0.56/+0.48/+2.83pct. Under the overall influence, the net interest rate of the 2023Q1-3 company was 6.03%, down 2.18pct year on year; the net interest rate of the 23Q3 company was 8.12%, down 2.10pct year on year, mainly due to the high 22Q3 exchange profit and loss base.
In terms of cash flow, the net cash flow from 2023Q1-3 operating activities was $68 million, a year-on-year decrease of 72.82 pct, mainly due to an increase in accounts receivable and prepaid supplier payments.
Investment suggestions: As a leading domestic bicycle exporter to the European and American markets, the company's own brand's online and offline channels are rapidly expanding, and production capacity expansion is progressing steadily. In the future, it is expected to achieve steady growth under the two-wheel drive of electric bicycles and its own brands. We expect the 2023-2025 operating income of Jiuqi Co., Ltd. to be 22.03, 25.88, and 3.148 billion yuan, up -7.27%, 17.47%, and 21.61%; net profit is 1.43, 1.86, and 239 million yuan, up -14.75%, 30.21%, and 28.31%. The corresponding PE is 23.9x, 18.4x, and 14.3x, with a target price of 20.01 yuan for 23 years, maintaining the buy-A investment rating.
Risk warning: There is a risk that competition in the industry will increase, raw material prices will fluctuate greatly, and market development will fall short of expectations.