Incident Overview
Yadi announced its 2023 results, achieving revenue of 34.763 billion yuan, +11.9% year over year; net profit of 2,640 billion yuan, +22.2% year over year. 23H1/H2 achieved revenue of 17.041 billion yuan/17.722 billion yuan, +21.3%/+4.2% year-on-year, and 23H1/H2 achieved net profit to mother of 1,188 billion yuan/1,452 billion yuan, +32.1%/+15.1% year-on-year. It is proposed to pay a year-end dividend of HK$0.48 per share at the end of 23, with a dividend ratio of 50.6%.
Analytical judgment:
Overall stable results for 23 years, profit recovery is expected to continue
In terms of volume, the company sold a total of 16.52 million two-wheelers in '23, +18%. In terms of price, the ASP bike in '23 was 2,104 yuan, -5.1% over the same period, mainly affected by low-end models seizing the share. 23H2's revenue has slowed. H2's ASP was 2,132 yuan, -1.3% year over month, but compared to H1 +2.7 pcts, we think it is mainly due to H2 company strengthening product structure optimization and upgrading, inventory removal, and improving store operations.
As the competitive landscape of the industry improves and the company's mid-range and high-end new product releases advance, we expect the company's ASP to continue to rise. Furthermore, the battery and charger business accounts for nearly three floors, and the company continues to strengthen the battery supply chain and aftermarket business.
In 2023, the company achieved gross profit margin of 16.9%, of which H2 gross margin was -1.2pct yoy, but +0.1pct month-on-month. The company achieved a net interest rate of 7.6%, +0.6pct year on year. The main benefit was that other revenue and net revenue contributions were compounded by better expense ratio control during the period, and the profit side's performance was better than revenue. In anticipation of an increase in ASP, the recovery in the company's profitability is expected to continue.
The acquisition of the electronic control system Lingbo Electronics strengthened its supply chain integration capabilities. After completing 100% control of Nandu Huayu Power in 2022, the company successfully controlled its core product, graphene lead-acid batteries, and took an important step in the upward layout of the industrial chain and achieved autonomous control of the core components of the battery+motor. The company also announced on March 17, 2024 that it plans to acquire 100% of Lingbo Electronics' shares in cash to further extend the electronic control system layout and strengthen supply chain integration capabilities. We expect the company's electronic control costs to drop 10% after entering Left and right, directly led to a marginal increase in profits.
Overseas market layout is leading, and subsequent development is worth looking forward to
The company currently has 8 global production bases including Vietnam, Indonesia, Wuxi, and Tianjin, with an estimated annual production capacity of more than 20 million units, and product sales covering 90 countries around the world. The company held a groundbreaking ceremony for a production plant in Vietnam's Tan Huang Industrial Park in early 2024. The Bac Giang base is scheduled to be put into operation in 2025, with an annual production capacity of 2 million electric motorcycles;
We believe that the company's active and forward-looking layout in the promising Southeast Asian market is expected to accelerate the pace of overseas expansion and increase the company's global market share.
Investment advice
As a leading domestic two-wheeler company, the company has strong comprehensive strength in R&D, products, and channels. Electric two-wheeler sales have maintained a leading position in the world for 6 consecutive years. As the company accelerates its advance layout in the Southeast Asian market, we believe that the company's global market share is expected to continue to increase. We expect the company's 2024-2026 revenue to be 400.78/449.49/507.68 billion yuan, respectively, and EPS of 1.07/1.26/1.50 yuan respectively, corresponding to the closing price of 12.66 yuan/share (1HKD=0.92CNY) on March 22, 2024. PE will be 11.79/10.03/8.46 times, respectively, covered for the first time, giving a “buy” rating.
Risk warning
1) Downstream demand falls short of expectations; 2) Industry competition intensifies; 3) Overseas market development falls short of expectations; 4) The proposed acquisition of 100% of Lingbo Electronics' shares has not yet been completed, and there is still a risk of uncertainty.