Core views:
The company discloses its 2023 annual report. In 2023, we achieved revenue of 2.78 billion yuan (YoY +43.2%), net profit to mother of 320 million yuan (YoY +7.9%), gross profit margin 19.1% (YoY+1.3pct), and net profit margin of 11.6% (YoY-3.8pct). 23Q4 achieved revenue of 650 million yuan (YoY +60.0%), net profit to mother of 60 million yuan (YoY +64.9%), gross profit margin 21.7% (YoY+2.6pct), and net profit margin of 9.1% (YoY+0.3pct).
Revenue resumed rapid growth, and main business profits improved. (1) Revenue side: The impact of inventory removal from major customers in the vacuum cleaner business has basically ended, with revenue growth of +18% year over year; SharkNinja, a new strategic customer in the small household appliances business, contributed an increase of +117% year-on-year revenue; fixed and mass production of new auto zero business projects continued to be implemented, achieving revenue of 200 million yuan in 23 years. According to the annual report, the company's active orders exceeded 2.3 billion yuan in 24-26. (2) Profit side: The decline in apparent net interest rates in '23 was mainly due to financial expense ratios of +6.2 pct, and the company's net exchange earnings in '22 and 23 were +70 million yuan, respectively. Excluding the impact, the profit margin of the main business improved significantly. It is expected to result from the scale effect of the home appliance business and an increase in efficiency after the auto parts business production capacity climbed. The gross margins of the company's vacuum cleaners, small household appliances, and auto parts businesses were +0.9pct, +5.1pct, and +8.7pct, respectively.
The company disclosed its 2024 quarterly report. 24Q1 achieved revenue of 8.2 billion yuan (YoY +46.1%), net profit to mother of 90 million yuan (YoY +102.3%), gross profit margin of 17.4% (YoY-0.7pct), net profit margin 10.3% (YoY+2.9pct), and sales/management/R&D/finance expense ratios of -0.4pct/0.0pct/-0.7pct/-1.8pct, respectively. Q1 Performance was strong, and the exchange rate is expected to continue to contribute positively. Gross margin declined month-on-month, which is expected to be due to changes in the quarterly order structure.
Profit forecast and investment advice: Net profit due to mother is expected to reach 3.9, 4.9 billion yuan, and 60 million yuan in 24-26, +22%, +24%, and +23% year-on-year. Referring to comparable company valuations and company growth, a 24-year PE 20x, corresponding to a reasonable value of 21.11 yuan/share, was given a “buy” rating.
Risk warning: high customer concentration, trade tariff risk, raw material price fluctuations, etc.