Q1 Profits continued to grow at a high rate, and the new energy business grew at an impressive rate. The company achieved revenue of 863 million yuan (+22.22%) and net profit of 125 million yuan (+73.34%) in Q1 of 2024, after deducting net profit of 125 million yuan (+70.65%). By product revenue, the digital maintenance business (including comprehensive automotive diagnosis, TPMS, software cloud products, ADAS business, etc.) achieved revenue of 688 million yuan, an increase of 11.61% over the previous year; the digital energy business revenue was 160 million yuan, an increase of 103.33% over the previous year.
Gross profit margin has declined, and cost control is good. The company's overall gross margin reached 56.72% (-1.67%) in Q1 in '24, mainly due to the rapid increase in the revenue share of charging piles. At the same time, the cost rate for the period decreased by 3.25 pct year on year.
Among them, the sales/R&D/management expenses ratio was 14.29%/16.50%/8.00%, respectively, and the year-on-year change was -2.51pct/-1.18pct/+0.44pct. Q1 The company's net cash flow from operating activities reached RMB 206 million, an increase of 47.14% over the previous year. Contract liabilities continued to grow, with an increase of 9.62% over the annual report.
By cultivating overseas markets, the profitability of the new energy charging pile business is expected to continue to increase. 2024 In order to meet the growing demand for new energy charging piles abroad, Daotong Technology obtained more than 10 authoritative certifications in the world ahead of schedule, and successfully signed contracts with many of the top 50 largest global customers to maintain exponential growth in strategic customer reserves. The company successfully grasped international market trends, cultivated international market consumption potential, and expanded global market business. The company announced that the share of DC charging pile product sales is expected to gradually increase in 2024. At the same time, putting into operation at factories in Vietnam and North America can avoid the additional cost of imposing tariffs. Furthermore, through fine control of logistics costs, it is expected that there will be more room for improvement in the gross margin of the new energy charging pile business.
The DC supercharging pile industry leads the way and helps build a global charging ecosystem network. The company leverages the BMS communication protocol data and battery diagnosis technology foundation, and cooperates with top liquid cooling technology to develop breakthrough charging pile technology. In January '24, the company launched its flagship product, the DC overcharger MaxiCharger DC HiPower, at the Las Vegas International Consumer Electronics Show. It became the industry leader with a maximum charging power of 640 kW. The single gun output power reached 480 kW, marking a major breakthrough for the company in the field of overcharging, continuing to expand the broad space of the NEV diagnostic market, and continuing to build the company's new energy business ecosystem.
Risk warning: international trade and business risks; demand for charging piles falls short of expectations; market competition intensifies.
Investment advice: Maintain a “buy” rating. Due to the continued high growth of the company in the first quarter and the rapid decline in expenses, we revised our profit. We expect net profit to be 5.04/6.55/ 800 million yuan in 2024-2026 (the original forecast was 487/6.50/781 million yuan), corresponding to current PE 22/17/14 times, respectively. The company's charging pile business is expected to continue to grow at a high rate and maintain a “buy” rating.