Description of the event

On April 22, 2024, Tuobang Co., Ltd. released its 2024 quarterly report: 2024Q1 achieved operating income of 2,318 billion yuan, an increase of 16.20% year on year; realized net profit of 176 million yuan, an increase of 82.29% year on year; realized deducted non-net profit of 169 million yuan, an increase of 85.48% year on year.

Incident comments

24Q1 The company's operations continued to improve, and the growth momentum in all sectors was good. In 24Q1, the company achieved revenue of 2,318 billion yuan, +16.20% year over year; realized net profit of 176 million yuan, +82.29% year over year; realized deducted non-net profit of 169 million yuan, +85.48% year over year. The company's four major sectors have all achieved year-on-year growth. Looking at each business segment, the share of leading customers is stable, and the share of the remaining customers gradually increases as new products expand; 2) the home appliance sector, which focuses on developing superior categories, expanding the market share of new market applications such as clean appliances, temperature control, and business scenarios to increase the market share of advantageous categories; 3) The new energy sector is growing the fastest, mainly control and power products are gradually being promoted to the market and contributed incrementally.

Gross profit margin increased significantly year over year. The company's gross margin was 23.65%, +1.77pct year over year and +0.83pct month-on-month. The main reason for the increase in gross margin is the increase in autonomous and controllable new products and high-value categories, and the increase in shipment volume. At the same time, as high-priced inventory is gradually cleared and supply is stabilized, the company's strategic measures to reduce costs and increase efficiency have been effectively promoted, and gross margin has been raised together. Sales/management/ financial/ R&D expenses were 3.5%/3.7%/-0.5%/7.9%, respectively, +0.4pct/-1.0pct/-2.8pct/+0.9pct. The company's three expenses (sales expenses, R&D expenses, management expenses) were 348.63 million yuan, an increase of about 56.66 million yuan over the previous year, an increase of 19.41%. In addition to consolidating the advantages of the home appliances and tools sector, the company will focus resources to increase investment in the new energy sector to create the company's third growth curve. At the same time, in order to maintain the resilience and sustainability of the company's development, accelerate the development of core technologies such as mobile robots, servo drives and control technology, and cultivate the company's fourth growth curve.

As the company's third growth curve, New Energy continues to expand its sector layout. The new energy business mainly targets the two major application fields of small and medium energy storage and new energy vehicles. The products cover four major categories of batteries, power supplies, controllers and motors. For the energy storage industry, the company provides component products, including batteries, BMS, PCS, EMS, etc., as well as complete machine products, such as household energy storage, industrial and commercial energy storage, communication backup, portable energy storage, etc. For the new energy vehicle industry, the company mainly provides intelligent controllers and charging equipment for customers in the fields of new energy vehicles, other special vehicles, e-bikes, etc. The company continues to lay out in the new energy sector, accelerate production capacity investment, and actively carry out multi-regional production capacity layout. The market is worried that with the easing of the foreign energy crisis and climate warming, the decline in household storage demand will affect the company's profitability. We believe that in the context of decarbonization, along with stabilizing raw material prices and continuing development of new customers, the sector can still maintain good profitability.

Profit forecast and investment suggestions: In the long run, the boom trend of the Internet of Things remains unchanged. Under the Internet of Everything trend, downstream demand for intelligent controllers remains high, and the increase in the level of intelligence of various electrical appliances is driving the controller industry's volume and price increase. The company's 24Q1 business continued to improve, export demand was booming, and various sectors were growing well. Increased high-value business and cost reduction and efficiency led to a year-on-year increase in gross margin of 1.77pct to 23.65%. In addition, the company increased investment in the new energy sector and promoted the development of core technologies such as mobile robots, servo drives and control technology, and the company's third and fourth growth curves. We expect the company's net profit to be 6.97 yuan, 830 million yuan, and 973 million yuan in 2023-2025, an increase of 35%, 19%, and 17% over the previous year, corresponding to PE of 18, 15, and 13 times, maintaining a “buy” rating.

Risk warning

1. External risks such as the macro environment;

2. Exchange rate risk.