Core views:
24Q1 saw positive growth in both revenue and profit. The company disclosed its 2024 quarterly report. The 2024Q1 quarter achieved operating income of 2.07 billion yuan (YoY +9.2%), net profit of 130 million yuan (YoY +7.1%), gross profit margin 26.9% (YoY-0.9pct), net profit margin 6.3% (YoY-0.1pct), and sales/management/finance/R&D expense ratios of +0.7 pct, +0.2 pct, -0.6pct, and -0.2pct, respectively.
Export sales are expected to continue to grow and domestic sales to improve. 24Q1 revenue was corrected year on year. The main reason: (1) 23Q1 overseas brands and channels removed inventory, and export demand was weak, so for 24Q1, the revenue base is low. As export inventory ends and overseas demand improves, we think 24Q1 export sales may grow; (2) Domestic sales are also expected to improve. Specifically: According to Aowei Cloud Network, 24Q1's major small household appliances, rice cookers, soy milk machines, electric pressure cookers, mixers, and air fryers, respectively, the cumulative online sales volume of +5%, +31%, and -4% compared to the same period, -32%, The full year of 2023 was +13pct, +21pct, +7pct, +14pct, and +20pct, respectively. The industry is gradually recovering, and it is expected that the domestic sales business of Joyang, a leader in small kitchen appliances, is also improving.
Gross margin decreased by 0.9 pct in 24Q1, which we believe is due to an increase in the share of export business with lower gross margin. The 24Q1 fee rate remained stable, and the 24Q1 net interest rate was basically the same year on year.
Profit forecasting and investment advice. As a leader in small household appliances, the company's export OEM business has achieved rapid growth, and the domestic sales business has a rich product matrix. It continues to improve online and offline sales channels, and the business is expected to resume growth. Assuming a stable pattern in the small household appliances industry, we expect net profit to be increased by 11.8%, 12.0%, and 10.0% year-on-year in 2024-26, respectively. The company has strong product innovation and channel power. It gave 20xPE in 2024, corresponding to a reasonable value of 11.35 yuan/share, maintaining an “gain” rating.
Risk warning. The promotion of new products fell short of expectations; raw material prices continued to rise; the competitive environment deteriorated.