The company's recent situation
The company recently held a 2023 performance briefing to conduct offline research and product test drive activities.
reviews
Electric two-wheelers became the largest revenue business. The new business is growing well, and the autonomous scooter business is steady. In 2023, the company's revenue was 10.22 billion yuan, +1.0% year-on-year, achieving steady growth. By business, sales of electric two-wheelers increased 78% year over year to 1.471 million units, and revenue +74% year over year to 4.23 billion yuan, surpassing balance scooters and scooters to become the business with the highest share of revenue. Sales of scooters from independent channels were steady, but driven by Xiaomi channels and scooter sharing, scooter revenue was -32% YoY to 3.78 billion yuan; scooter business revenue was -46.1% YoY to 420 million yuan. Driven by the climbing sales volume of lawnmower robots (36,800 units) and the improvement of the all-terrain vehicle product matrix, the robot and all-terrain vehicle business revenue grew positively, up +109%/+19% year over year to 25/70 million yuan, respectively. By channel, sales revenue of independent brands was 8.189 billion yuan, +31.36% year on year; sales revenue of ToB products was 1,597 billion yuan, or -39.57% year on year; and Xiaomi's customized product distribution revenue was 436 million yuan, -65.03% year over year.
Two-wheelers and new businesses have led to an improvement in gross margin, and the cost investment period is still in progress. In 2023, the company's gross margin was 26.3%, +1.3ppt year on year. Among them, the gross margin of balance scooter+scooter/electric two-wheeler/service robot was 29.5%/19.3%/53.1% respectively, which remained flat year-on-year /+3.1/4.0ppt. The latter two businesses contributed greatly to the increase in gross margin. The increase in labor costs, storage leases, and platform service fees led to an increase in sales expenses, and share payments led to an increase in management fees. In 2023, sales/management/R&D expenses were 10.2/68/6.2 billion yuan respectively, and the corresponding rates were 10.0%/6.6%/6.0%, respectively, all of which increased year-on-year.
Due to the concentrated calculation at the end of the year and the off-season effect, the 4Q23 rate increased significantly from month to month. 4Q23 deducted non-net profit of 65 million yuan, net profit margin of 2.4%, year-on-year +3.1/month-on-month -1.9ppt.
The revenue growth prospects for each business line are optimistic, and the strategy for the next five years can be expected. We believe that in 2024, the company's electric motorcycle sales growth rate is expected to significantly outperform the industry, and its market share will increase steadily; the revenue of the lawnmower robot and all-terrain vehicle business will enter a period of rapid growth, which is expected to gradually contribute to profits. The company proposed a strategy for the next five years. The target revenue for 2027 is 40 billion yuan, with a net profit margin of more than 10%. We believe that the company has solid technical capabilities and synergy effects, clear brand positioning, and flexible organizational structure to form a bottom level of support; scooters and two-wheelers are cash cow businesses, consolidating the profit base. The all-terrain vehicle and lawnmower robot business is in a period of rapid growth, and profits are expected to gradually be reflected from 2024; following the improvement of the basic layout of the short travel business after e-bikes, the subsequent cost pressure is expected to ease.
Profit forecasting and valuation
Considering the impressive growth rate of the motorcycle business in 2024, we raised our 2024 profit forecast by 4.2% to 800 million yuan and maintain the 2025 profit forecast. The current stock price corresponds to the company's 2024/2025 25/19xP/E. We maintain our outperforming industry rating and target price of 36 yuan, corresponding to 2024/2025 32x/25xP/E, which has 30% upside compared to the current stock price.
risks
Price competition in the industry intensified; overseas sales fell short of expectations.