Incident: The company achieved revenue of 159 million yuan in 24Q1, -6.52% year-on-year; realized net profit to mother of 0.23 million yuan, +28.25% year-on-year.
The decline in revenue from private brands has narrowed, and the OEM business has clearly recovered. 1) In 24Q1, the company's own brand revenue was -14.37% year-on-year, and the decline narrowed; domestic/export sales revenue was -17.30%/+28.23% year-on-year. The overseas business expansion of the company's own brands progressed steadily, and business revenue improved and recovered significantly year-on-year. 2) 24Q1's OEM/ODM business revenue was +32.51% year-on-year; business revenue rebounded as the inventory levels of major customers recovered.
In terms of profit, profitability continues to be optimized. 1) The company's gross margin declined slightly year on year, but remained at a high level: 24Q1 gross sales margin was 49.68%, -2.02 pct year on year; mainly considering the rapid growth rate of the OEM business with low gross margin, changes in revenue structure brought about overall changes in gross margin. 2) The company continues to strictly and carefully control all expenses: 24Q1 The company's sales/management/finance/R&D expenses rates were 23.59%/-1.00%/6.06%, respectively, -3.30/ -0.01/-1.18/-0.54 pct, and profitability maintained a positive trend.
In terms of cash flow, the company's net cash flow from 24Q1 operating activities was -104.77% year-on-year, and the main reason for the difference with the company's net profit was: 1) the increase in the company's OEM/ODM business revenue share and the increase in the share of business revenue through the distribution model. Affected by these two business periods, operating receipts were unevenly distributed in each reporting period; 2) 24Q1 operating liabilities decreased; 3) the 24Q1 company's inventory level declined steadily.
Investment suggestions: On the revenue side, the construction of emerging channels for domestic sales of private brands is progressing in an orderly manner, and the export business model is gradually changing; on the cost side, the company has improved operating efficiency, cost reduction and efficiency are beginning to show results, and the revenue of export sales of its own brands optimizes profit levels through changes in channels and operating models. In the future, the company will also further promote efficiency and cost reduction, and wait for consumption to recover with more efficient operation and management. Considering that the company continues to strictly and carefully control various expenses, we slightly lowered the company's sales expenses, raised net profit to mother for 24-26 to 0.98/1.13/129 million yuan, respectively (previous value was 0.92/1.10/121 million yuan), and corresponding dynamic valuations were 28.4x/24.5x/21.5x, respectively, maintaining the “incremental” rating.
Risk warning: Private brand sales fell short of expectations; export orders fell short of expectations; rising raw material prices and rising shipping costs led to a decline in profits.