The company announced a pre-increase in 2023 performance. It is expected to achieve net profit of about 960 to 1,060 million yuan in 2023, +36.88% to 51.13% year over year, and estimated net profit without deduction to mother of 9.24 to 1,024 million yuan, or +15.97% to 28.52% year over year. Looking at a single quarter, 23Q4 is expected to achieve net profit of 158-258 million yuan, +20.75% to 97.04% year-on-year. It is estimated that 23Q4 net profit after deducting non-return to mother is about 1.56 to 256 million yuan, or +54.04% to 152.56% year-on-year.
Fuel two-wheelers: Export sales are expected to resume rapid growth in 23Q4, and domestic sales are expected to perform steadily during the off-season. According to the Motorcycle Chamber of Commerce, sales of high-displacement motorcycles (250cc or more, excluding 250cc) were 525,400 units in 2023, a year-on-year decrease of 5.06%. Q4 high-displacement (250cc or more, excluding 250cc) sales volume was 116,700 units, +20.93% year-on-year. The Q4 high-displacement industry's prosperity increased markedly. It is expected to be mainly driven by export sales. The overall export volume of Q4 two-wheeled motorcycles was +24.31% year-on-year. In recent years, the company has continued to develop two rounds of export sales. In the first half of 2023, the company exported 50,800 units in two rounds, achieving revenue of 1,242 billion yuan, an increase of 132.43% over the previous year. 23Q3 was affected by the pace of orders, and the overseas growth rate may slow down. It is expected that the two rounds of export orders will resume in 23Q4, which is expected to achieve rapid growth. Against the backdrop of the off-season, domestic sales performance is expected to be stable in the 23Q4 round.
All-terrain vehicles: Overseas inventories+high base. 23Q4 all-terrain vehicles are expected to be under year-on-year pressure. Overseas four-wheeler channel inventory levels are high. In the first three quarters, the company promoted inventory removal in overseas markets, leading to an increase in sales expenses. It is expected that 23Q4's all-terrain vehicle business will still be out of inventory, superimposed on 22Q4 as a high base. It is expected that the 23Q4 all-terrain vehicle business will remain under year-on-year pressure. With the end of overseas inventory removal and new product shipments, the all-terrain vehicle business is expected to gradually resume steady growth.
Profit side: It is expected that Q4 will continue the trend of improving profitability, mainly driven by factors such as product structure optimization, improved production efficiency and cost management capabilities, appreciation of the USD/RMB exchange rate, and a year-on-year decline in international shipping costs. Looking ahead to 2024, four-wheeler depots are expected to end + new overseas U/Z series products will be launched one after another. Four-wheelers are expected to resume steady growth, two-wheelers will continue to expand overseas, new products+ channels will work together, and growth in 2024 is quite certain.
Furthermore, both the two- and four-round businesses have product structure upgrade logic, which is expected to drive gross margin to maintain a high level.
Investment advice: The company's net profit for 2023-2025 is expected to be RMB 1,000, 12.01, and RMB 1,424 billion, respectively, +42.6%, +20.1%, and +18.6% year-on-year, corresponding to the 2023-2025 PE of 13x, 11x, and 9x, respectively, maintaining a “buy” rating.
Risk warning: macroeconomic fluctuations, adverse changes in trade policies, exchange rate fluctuations, increased market competition