Incidents:
Jiayi Co., Ltd. announced its results report for the first quarter of 2024. In 2024Q1, the company achieved revenue of 430 million yuan, YoY +78.2%, net profit to mother of 110 million yuan, YoY +102.2%; net profit after deducting non-attributable net profit of 110 million yuan, YoY +111.6%. The company achieved another good performance in 2023Q1, mainly because the main products of the Stanley brand are still popular in the US and still have full orders during the industry's traditional off-season.
Full orders led to a further increase in revenue:
Jiayi's revenue increased again in 2024Q1, which we believe was mainly due to strong demand for Stanley Quencher product terminals, which led to full orders for Jiayi. Based on the convertible bond offering instructions and the company's annual report data disclosed by the company, we can estimate the company's 2024Q1 sales volume. The sales volume of metalware in the first half of 2023 and the full year of 2023 was 14.05 million units and 38.13 million units respectively. From this, it can be seen that the sales volume for the second half of 2023 was 24.08 million units, while the revenue for the same period was 1.1 billion yuan. It can be estimated that the average price for the second half of 2023 was 46 yuan. If we calculate this average price, the 2024Q1 sales volume is probably close to 9.4 million units. Considering the year-end shutdown situation, we assume that the February sales volume is 1.5 million units, then the average sales volume in January and March is close to 4 million units. Comparing the peak revenue performance in 2023Q3, the average monthly sales volume was 4.17 million units when calculated at an average price of 46 yuan. As can be seen from this, 2024Q1 orders are still full.
Gross margin is expected to remain high due to scale effects:
Jiayi's 2024Q1 gross profit margin was 38.7%, YOY+1.7pct, mainly due to the increase in production to form a scale effect, compounded by the favorable depreciation of the RMB exchange rate. Jiayi mainly mass-produces Stanley Quencher series thermos cups. Compared with its peers, it has a larger scale effect and higher production efficiency. If the RMB exchange rate remains stable, we believe that Jiayi's gross margin is expected to remain high.
Expense spending remains restrained in the face of high revenue growth:
Compared to the significant increase in revenue, Jiayi maintained restraint in terms of cost growth. The three major cost rates composed of sales expense ratio, management cost rate, and R&D expense ratio. The total for 2024Q1 was 8.2%, while 2023Q1 was 12.3%. From this, it can be seen that Jiayi has performed well in cost control.
Investment advice:
Jiayi Co., Ltd. is a leading manufacturer of thermos cups and pots. Product sales from major overseas customers continue to be booming, which is beneficial to Jiayi's order performance. Maintaining a buy-A investment rating, the company was given 15x PE in 2024, with a target price of 87.00 yuan for 6 months.
Risk warning: raw material prices are rising, industry competition is intensifying, and there is a risk of exchange rate fluctuations.