Incident: The company released its 2024 quarterly report. 2024Q1 achieved revenue of 432 million yuan, +78% year on year, net profit to mother of 107 million yuan, +102% year over year, net profit of 109 million yuan after deducting net profit of non-return to mother, +112% year over year.
The scale effect was unleashed, leading to a year-on-year increase in profitability. 2024Q1's gross profit margin was 38.7%, +1.7 pct year on year, sales/management/R&D/finance expense ratios were 1.0%/4.0%/3.2%/-0.8%, respectively, -1.3 pt/-1.9 pct/-0.9 pct/-1.1 pct, net profit margin 24.9%, and +3.0 pct year on year.
Product structure optimization and large-scale production help lead the gross margin industry. In 2023, the average price of the company's products was about 45.25 yuan/piece, +19% compared with the same period. Mainly, high-capacity cups of 700ml or more accounted for an increase in revenue, and the product structure continued to be optimized; the large single product model is conducive to giving full play to the advantages of automated production lines. The superposition of the company's product process is more complicated and the added value is higher, and the company's gross margin is leading in the industry.
Participation in outdoor activities has increased, and superimposed scene segmentation puts forward differentiated requirements for product characteristics, leading to an increase in consumption frequency. Since 2021, both the US outdoor sports participation rate and number of campers have increased rapidly, driving the demand for outdoor products such as thermos cups. In addition, diversified scenarios drive products to be more segmented in terms of capacity, volume, materials, etc., and diversification of consumption scenarios drives continued growth in market size.
Demand for product terminals is clearly diversifying, and repurchase rates and premiums are rising. Brands continue to launch new designs and co-branded products. Among them, limited-edition models even have some collectible value, stimulate terminal demand in multiple dimensions, speed up product replacement, and greatly increase product repurchase rates and product premiums.
The major customer strategy is progressing steadily, production capacity is gradually expanding, and the degree of intelligence is increasing. Along with leading brands increasing their promotion efforts and increasing brand influence, the increase in downstream customer concentration has raised the requirements for the upstream supply chain, driven the increase in supplier concentration, and is optimistic that the company will further bind large customers, optimize existing manufacturing technology, increase the degree of automation of production lines, and achieve steady expansion of production capacity.
Profit forecast and rating: We are optimistic that the company will be deeply tied to major customers, and the steady expansion of production capacity will lay the foundation for scale growth. The company's net profit for 2024-2026 is estimated to be 619 million yuan, 741 million yuan, and 886 million yuan respectively. The PE corresponding to the current stock price is 13x/11x/9x, respectively, maintaining the “recommended” rating.
Risk warning: Overseas terminal demand falls short of expectations; raw material prices fluctuate; industry competition intensifies; exchange rate fluctuations, etc.