Incident: The 24Q1 company achieved revenue of 350 million yuan, -0.2% year on year, realized net profit of 50 million yuan, +13.5% year over year, and realized net profit without deduction of 40 million yuan, -14% year on year.
The company's Q1 revenue remained essentially flat year over year. We expect the company's core business commercial lighting and industrial lighting revenue growth to be under pressure.
2024Q1's gross margin was 30.91%, -1.64pct year on year, net margin was 14.48%, +1.79pct year on year. Gross margin declined year over year. The quarterly sales, management, R&D, and financial expense ratios of 2024Q1 were 6.48%, 4.23%, 7.58%, and -2.12%, respectively, +0.88, +0.03, +2.06, and -3.08pct.
The increase in the company's R&D cost rate is mainly due to the increase in R&D investment. The year-on-year decline in financial expense ratios was mainly due to increased interest income and increased exchange earnings. The company's non-net profit declined year-on-year. The total non-recurring profit and loss of the 24Q1 company was $13 million, mainly government subsidies (4.16 million), changes in fair value of financial instruments and disposal profit and loss (7.77 million), and income from entrusting others to invest or manage assets (4.08 million).
On the balance sheet side, the company's 2024Q1 monetary capital+transactional financial assets were 1,752 billion yuan, or 300.75% over the same period, mainly due to the receipt of funds raised through stock issuance. Inventory was $239 million, +31.25% year over year, and total notes receivable and accounts receivable were $210 million, +11.37% year over year. On the turnover side, the company's 2024Q1 inventory, accounts receivable, and accounts payable turnover days were 88.3, 55.72, and 79.49 days, respectively, and +12.68, +7.5, and +5.37 days compared to the previous year. On the cash flow side, the net cash flow from 2024Q1's operating activities was 41 million yuan, or -49.11% year-on-year, of which 239 million yuan in cash from purchasing goods and receiving labor payments was +26.4% year-on-year.
Investment advice: The company is deeply involved in the overseas LED commercial/industrial lighting field, and is expected to fully benefit from the increase in LED penetration in overseas markets in commercial and industrial scenarios, and at the same time accelerate progress in developing the US market after the epidemic. We expect the company's net profit to be 2.7/32/370 million yuan respectively in 24-26, corresponding to dynamic PE of 13.5x/11.6x/10.1x, maintaining the “increase” rating.
Risk warning: Risk of LED penetration in commercial & industrial lighting falling short of expectations; risk of US market expansion falling short of expectations; risk of increasing industry competition; risk of falling short of expectations in new categories.