Incident Overview
The company released its 2023 annual report. In 2023, it achieved operating income of 10.222 billion yuan, +1% year-on-year; realized net profit of 598 million yuan, +33% year-on-year.
The share of revenue from independent brands increased rapidly. The rapid release of electric two-wheelers achieved operating revenue of 10.222 billion yuan in 2023, +1% year over year, of which Q4 was 2,696 billion yuan, +8% year over year. By sales channel, independent brands achieved rapid growth, and ToB and Xiaomi customization contracted rapidly: 1) Independent brands: achieved revenue of 8.189 billion yuan in 2023, +31% year-on-year, achieving rapid growth; 2) ToB: achieved revenue of 1,597 billion yuan in 2023, -40% year-on-year; 3) Xiaomi customized: achieved revenue of 436 million yuan in 2023, or -65% year-on-year. By product, electric scooters & scooters are under pressure in the short term, and businesses such as electric two-wheelers and robots are rapidly expanding: 1) Electric scooters and scooters: achieved revenue of 3.488 billion yuan in 2023, -37% over the same period; 2) Electric two-wheelers:
Revenue of 4.232 billion yuan in 2023, +74% year over year, is the main driving force for revenue side growth; 3) Robotics: achieved revenue of 255 million yuan in 2023, +125% year over year; 4) all-terrain vehicles: achieved revenue of 698 million yuan in 2023, +19% year over year; 5) Accessories and others: achieved revenue of 1,552 billion yuan in 2023, +6% year over year. By region, domestic and overseas revenue of 5.413 billion yuan and 4.809 billion yuan were achieved in 2023, +23% and -16%, respectively. Overseas market performance was sluggish. Looking back, on the one hand, as demand for electric scooters & scooters from overseas gradually picks up, and on the other hand, the company's revenue growth is expected to accelerate as the volume of electric two-wheelers accelerates, and all-terrain vehicles, robots, etc. break through rapidly.
The gross margin of various products has risen sharply, and the net sales margin has increased markedly
In 2023, the company achieved net profit of 598 million yuan, +33% year-on-year, and realized net profit without deduction of 413 million yuan, or +9% year-on-year. The 2023 net sales margin and net non-sales margin were 5.83% and 4.04%, respectively, +1.40 and +0.29pct year-on-year, respectively. 1) Gross profit margin: The gross margin of sales in 2023 was 26.90%, +0.93pct year on year. Among them, the gross margins of electric balance scooters & scooters, robots, and all-terrain vehicles were 29.45%, 19.27%, 53.11%, and 24.64%, respectively, +0.01, +3.71, +3.80, and +14.42pct, respectively. If the store construction subsidy of 116 million yuan is excluded, the gross profit margin of electric two-wheelers was 21.42%, a significant increase. We judge that the main product structure was optimized. 2) Expense side: The cost rate for the 2023 period was 21.31%, +2.17pct year on year, suppressing the increase in net interest rates to a certain extent. Among them, sales, management, R&D, and finance expenses were 10.01%, 6.61%, 6.03%, and -1.33%, respectively, +0.87, +0.68, +0.27, and +0.36pct, respectively. 3) Net income from changes in fair value in 2023 was 148 million yuan, +87% year-on-year, significantly increasing profit margins.
New products are being launched at an accelerated pace, and the company's growth space continues to open up
While consolidating traditional advantages such as electric scooters and balance scooters, the company continues to expand its products to open up room for growth. 1) Electric two-wheelers: According to the company's 2022 annual report, the company has nearly 3,000 specialty stores in China, covering more than 700 counties and cities; it has also released various strategic products such as the Bmax, F, A+ and MMAX series. The E series and B series have entered overseas markets and have been launched in more than 10 countries including the United Kingdom, Japan, and Mexico; 2) All-terrain vehicles:
According to the company's 2022 annual report, the company's all-terrain vehicles are based on the global market and have successfully entered the European market. UTVs and SSVs have also successfully entered the US market, and the products have been quickly recognized by users and dealers. In 2023, the company continued to improve its product system, which covered the three major series of ATV-Snarler, UTV-Fugleman and SSV-Villain; 3) Robots: According to the company's 2023 annual report, the company's mowing robot products have been successfully sold to more than 30 countries around the world, becoming the first cordless lawn mower brand with 30,000 + user activations. In terms of commercial service robots, the product matrices of the No. 9 sugar cube delivery robot, the No. 9 flying saucer delivery robot, and the No. 9 food delivery robot have been rapidly expanded. Furthermore, the No. 9 robot mobile platform (RMP) cooperated closely with Nvidia. The robot chassis used in the Isaac AMR was based on the RMP Lite 220 robot mobile platform. The Nova Cater AMR, which was jointly developed, debuted at CES 2024 in January 2024. The two work closely together to empower the global service robot industry.
Investment advice
We expect the company's 2024-2026 revenue to be 131.04 billion yuan, 163.12, and 19.406 billion yuan, respectively, +28%, +24%, and +19%. The 2024-2026 net profit to mother will be 7.39, 10.51, and 1,462 billion yuan, respectively, +24%, +42%, and +39%. The 2024-2026 EPS will be 10.34, 14.70, and 20.45 yuan, respectively. The 2024/4/9 stock price of 28.07 yuan corresponds to PE 27, 19 and 14x, first coverage, giving an “gain” rating.
Risk warning
New product expansion fell short of expectations, overseas markets declined, and the competitive landscape deteriorated.