Key points of investment:
The company released its 2023 annual report, and its performance exceeded expectations. The company's 2023 revenue was 10.222 billion yuan, yoy +1.0%, net profit due to mother of 598 million yuan, yoy +32.5%, net profit of non-return mother of 413 million yuan, yoy +8.5%; 23Q4 revenue was 2,696 million yuan, yoy +8.2%, net profit due to mother of 219 million yuan, yoy +279.9%, net profit of non-return mother was 65 million yuan, reversing year-on-year losses. Net profit performance in 2023 exceeded expectations, mainly due to lower equity payment fees compared to expectations in early 2023.
Electric two-wheelers: Continued high revenue growth and increased profit contribution. Revenue in 2023 was 4.232 billion yuan, 74% year-on-year, and sales increased 1.47 million units, 75% year over year, contributing the main increase. In terms of operation, by the end of 2023, there were about 4,800 domestic specialty stores, adding 1,800 new ones, contributing the main increase. Looking ahead, 2024 will continue the high growth trend, mainly due to: 1) the price band sinks. Previously, the card slot was 5,000 yuan+ leading brands, and products were further launched at 3,000 yuan+ in 2024; 2) the stores are still expanding, and the expansion will continue in 2024; 2024 is the last year of the new national standard exchange, supporting industry growth. On the profit side, with design cost reduction and scale effect, net interest rate continues to increase, and profit contribution continues to increase.
Electric scooters & balance scooters: The TOC side sees an inflection point, and the TOB side basically reflects negative disturbances. 1) TOC side: In 2023, retail revenue of own-brand scooters was 2.112 billion yuan, -7% year-on-year, but 23Q3 saw an inflection point in retail electric scooter activations from major brands. The inflection point continued to be realized in January-January 2024, and the revenue growth rate is expected to rise steadily in 2024.
2) TOB side: Disturbed by the poor economic environment in Europe and the US and the procurement cycle of shared operators, etc., TOB scooter revenue in 2023 was 1,348 billion yuan, or -43% year-on-year. The subsequent recovery in demand still depends on the macroeconomic situation. 3) Xiaomi customized distribution: Revenue of 436 million yuan in 2023, -65% YoY, accounting for 4% of overall revenue.
New business in the blue ocean: leading intelligent technology, rapid expansion of new business. 1) Robots: Revenue of 252 million yuan in 2023, compared to 125%. The cost performance ratio of second-generation lawnmower products is outstanding. The market has expanded from Europe to North America, Australia and New Zealand, etc., and channels have expanded from garden tools to offline retail, giving full play to the effects of channel reuse. It is expected to maintain a high growth trend in 2024. 2) All-terrain vehicles: Revenue of 698 million yuan in 2023, 19% over the same period. The US market expanded rapidly in 2024, and a new 24H2 hybrid all-terrain vehicle was launched. It is expected to maintain a sharp increase in volume and price in 2024; on the profit side, a break-even balance was basically achieved in 2023, and the profit harvest period was reached in 2024.
Product structure changes & scale effects have been released, gross margin has been optimized, cost investment has increased, and net interest rates without return to mother have remained basically the same.
In 2023, the company's gross profit margin was 26.9%, +0.9pct year on year, mainly due to a decline in revenue from the low-profit TOB end and Xiaomi's customized channel; revenue from electric two-wheelers increased rapidly, scale effects were released, and gross margin was optimized. The sales/management/R&D/finance expense rates in 2023 were 10.0%/6.6%/6.0%/-1.3%, respectively, +0.9/+0.7/+0.3/+0.4pct. The main businesses, such as robots and all-terrain vehicles, are still in the product and market investment period, and the cost investment is large. The net interest rate after deduction in 2023 was 4.0%, +0.3pct year-on-year, which was basically the same. Looking ahead, as the scale effect of electric two-wheelers continues to be unleashed, the Blue Ocean business is gradually entering a period of profit harvesting, and the net interest rate is expected to be optimized!
The pioneer of intelligent short transportation, adhering to the engineer culture, continues to promote technological innovation and product iteration. It has strong commercial monetization capabilities and fast pace, reflecting the company's comprehensive capabilities in consumer demand, market trends, product design and development, supply chain, channel docking, and marketing promotion. Considering the increase in revenue share of electric two-wheelers with low net profit + new products still in the market investment period, we slightly lowered our 2024 net profit forecast to 766 million yuan (previous value was 811 million yuan), maintained the 2025 profit forecast of 1,083 million yuan, and added the 2026 profit forecast of 1,468 million yuan, respectively. The corresponding PE for 2024-2026 was 28.2%/41.4%/35.6%, respectively. The corresponding PE for the current market value is 26X/18X/13X. Nvidia's core partners provide valuation flexibility and still maintain “growth” ” Rating!
Risk warning: Overseas consumption has declined, and competition for two-wheelers has intensified.