Net profit to mother increased 32% year-on-year to $280 million in 24Q1
The company released its annual report for the year 23 and the quarterly report for '24: revenue of 12.11 billion yuan, up 6.4% year on year; net profit of 1.01 billion yuan, up 43.65% year on year; achieved revenue of 3.06 billion yuan, up 6.3% year on year in 24Q1; net profit to mother of 280 million yuan, up 32.0% year on year and 34.9% month on month.
We are optimistic that the company's all-terrain vehicle/motorcycle business will increase its overseas market share. The company's net profit for 24-26 is 12.1/15.9/1.99 billion yuan respectively (maintaining the previous value for 24-25 years). Compared with the company's 24-25 year average PE average expectation of 20.6 times, we gave the company 20.6 times PE in 24, with a target price of 165.83 yuan (previous value of 113.51 yuan), maintaining a “buy” rating.
The upgrading of the all-terrain vehicle structure promoted an increase in unit prices, and the increase in motorcycle exports contributed significantly to the company's steady revenue growth in 23 years. By category: 1) The company's all-terrain vehicle revenue was affected by the post-epidemic recovery in industry demand, which fell slightly by 4.9% to 6.50 billion yuan over the previous year, but the market share continued to increase.
At the same time, the company focused on optimizing the product structure and launched high-end models such as the Z950 Chill and the new X8 and X10, driving the average unit price of all-terrain vehicles +8% to 44,000 yuan; 2) In terms of motorcycles, the company launched new products such as 800NK and XO Baboon in '23, and domestic sales bucked the trend, increasing by +8.6% to 99,000 units; overseas sales entered a period of rapid development, with export sales reaching 98,000 units. Revenue increased 78% year-on-year to 2.29 billion yuan.
Continue to promote fee control and cost reduction, Q1 exchange or increase net profit
The company's consolidated gross margin for 23 years was +8.1pct to 33.5% year on year, with gross margin of two-wheelers +4.1% to 24.6% year over year, and gross margin of four-wheelers +12.1% to 39.5% year over year, mainly due to the increase in the share of the company's high value-added products and a sharp drop in shipping costs. In terms of cost rates, the 23-year sales rate was +3.4pct to 11.1% year over year, or due to an increase in promotion and advertising expenses in response to the recovery in industry demand; the management rate was 4.68%, +0.3 pct year over year; and the R&D rate was 7.63%, +1.0 pct year over year. The 24Q1 company's net interest rate was +2.0/1.5pct to 9.5%, respectively. We think the main factors are: 1) the company's fee control cost reduction continued, and the promotion intensity declined year-on-year. The total three-fee ratio was -3.7/-1.3pct to 21.8%, respectively; 2) Exchange affected or increased Q1 net profit, with the financial rate being -2.0/-1.5pct to -2.15% month-on-month.
Build “global manufacturing” competitiveness and continue to expand the channel network
The company is actively promoting a global layout. On the one hand, it is building the core competitiveness of “global manufacturing”. The first phase of the Mexican territorialization project has been completed and put into operation. While ensuring rapid delivery and after-sales of products, the company may also be expected to further reduce shipping costs, tariffs, etc. On the other hand, the company is focusing on increasing the coverage of the overseas channel network. By the end of '23, there were more than 4,000 retail outlets worldwide, of which more than 400 new channels were added in two rounds overseas in '23, with a cumulative network of nearly 1,700 dealers. We are optimistic that the company will continue to achieve rapid export business growth through channels and market development, combined with the launch of new products.
Risk warning: New product sales fall short of expectations, and the risk of fluctuations in exchange rates and shipping costs.