Incident: Beiding Co., Ltd. announced its 2024 quarterly report. The company achieved revenue of 160 million yuan in the first quarter, YoY -6.5%; realized net profit to mother of 0.2 billion yuan, YoY +28.3%. Q1. The export business of Beiding's own brands recovered, cost control continued to show results, and profitability improved year-on-year in a single quarter.
The year-on-year decline in Q1 revenue narrowed: Beiding's Q1 revenue YoY in a single quarter was -6.5%, and the decline narrowed to single digits, mainly driven by the positive growth rate of export sales revenue. Looking at the subregions:
1) Q1 Beiding's own brand's domestic revenue YoY -17.3%. Domestic consumption of small kitchen appliances is relatively lackluster. Beiding products are positioned as high-end, and sales performance is under pressure due to the influence of the consumer climate. 2) Q1 Beiding's export revenue YoY +31.5%. Among them, brand business revenue YoY was +28.2%, and revenue from the overseas business of independent brands gradually resumed growth after completing channel and operating model adjustments; OEM business revenue YoY +32.5%, benefiting from OEM customers replenishing inventory, and the company's OEM business revenue continued to rise. We believe that with the gradual recovery of domestic consumption, Beiding products are expected to be favored by quality consumers, and subsequent revenue is expected to pick up.
Q1 Improved operating efficiency and improved profitability: Beiding's Q1 net interest rate was 14.2%, +3.8pct year-on-year. Q1 The company's gross margin was -2.0pct year on year, but profitability increased year over year, mainly because the company strictly controlled expenses, and operating efficiency improved markedly. The cost rate for the Q1 period was -5.0 pct year on year. Among them, sales, finance, and R&D expenses rates were -3.3 pct, -1.2 pct, and -0.5 pct year-on-year, and the management expense ratio remained the same year on year. We believe that the company continues to improve operation and management efficiency, and profitability is expected to continue to increase as consumption recovers.
Q1 operating cash flow small net outflow: Q1 Beiding's net operating cash flow - RMB 2,087 million, YoY -104.8%. The net cash flow from Q1 Beiding's operating cash flow was mainly due to: 1) decline in domestic revenue from independent brands, YoY -19.4% of cash from Q1 sales of goods and provision of services; 2) the increase in OEM/ODM business revenue and the increase in the share of independent brands' business revenue through the distribution model had an impact on the accounts receivable period. The balance of accounts receivable at the end of the period YoY +57.8%.
Investment advice: Beiding products are positioned as high-end and are expected to benefit from the upgrading of domestic consumption. The company optimizes product structure, expands categories, promotes independent brands to go overseas, and expands omnichannel user touchpoints, and business performance is expected to continue to grow rapidly. We expect the company's EPS to be 0.27/0.31/0.37 yuan from 2024 to 2026, maintain a buy-A investment rating, and give a dynamic price-earnings ratio of 35 times 2024, which is equivalent to a target price of 9.42 yuan in June.
Risk warning: Competition in the industry has intensified, raw material prices have risen sharply, and the RMB has appreciated sharply.