Introduction to this report:
The company has a high online market share. The company has an active online sales and dealer support strategy, and the subsequent growth rate is expected to outperform the industry.
Key points of investment:
Considering that industry demand is still slowly recovering weakly, and market competition is fierce. We lowered 2024-2025 and added a profit forecast for 2026. We expect the 2024-2026 EPS to be 1.84/2.01/2.14 yuan (2024-2025 original value is 2.31/2.51 yuan, reduction of -20%/-20%), +10%/+7% year-on-year, with reference to comparable companies in the same industry, and considering that sector valuations have rebounded after local trade-in policies have been introduced one after another. We will give the company 17.5x PE in 2024, and lower the target price to 32 yuan to maintain” “Cautiously increase” rating.
Performance summary: The company's performance fell short of expectations. The company's 2023 revenue was 1,227 million yuan (-3.8%), with a performance of 179 million yuan (-14.64%); Q4 revenue of 283 million yuan (-9.56%), with performance of 0.4 billion yuan (-91.87%), net profit of non-return to mother of 11 million yuan (-65%).
Direct sales have increased year over year, and distribution channels are under pressure. In 2023, the company's distribution channel revenue was 982 million yuan year on year, -9% year on year; direct channel revenue was 246 million yuan, +28% year over year. The company's direct sales model is mainly e-commerce sales channels. By opening official flagship stores on e-commerce platforms such as JD and Tmall to sell products, it has effectively promoted the rapid growth of e-commerce sales scale.
In 2023, the total turnover of the company's JD direct sales+distribution model was 548 million yuan, +7% year-on-year, and Tmall's total turnover was 355 million yuan, +18% year-on-year. At the performance level, the company's gross margin for 2023Q4 in 2023 was 45.35%, +0.11pct year on year, and the net margin was 1.4%, or 14.16pct year on year. Q4 quarterly sales, management, R&D, and finance expense ratios were +0.79, +8.04, +2.74, and -0.59pct year-on-year.
Looking forward to the future, the company's online market share is high, the company has an active online sales and dealer support strategy, and the subsequent growth rate is expected to be superior to that of the industry.
Risk warning: Profit margins are under pressure due to fluctuating raw material prices and increased market competition.