Short-term operations are under pressure to accelerate the cultivation of a new growth curve
Feike Electric released its quarterly report. In the first quarter of 2024, it achieved revenue of 1,174 million yuan (yoy -14.52%) and net profit of 180 million yuan (yoy -43.78%). Consumption differentiation has put pressure on short-term operations, and a new growth curve is being cultivated at an accelerated pace. We expect the company's 2024-2026 EPS to be 2.52, 2.85, and 3.31 yuan respectively (previous values were 2.81, 3.37, and 4.03 yuan, respectively). Comparatively, the company's 2024 Wind unanimously expected an average PE value of 23 times, gave the company 23 times PE in 2024, and gave the target price of 57.96 yuan (previous value: 56.20 yuan), maintaining the “gain” rating.
Accelerate the layout of high-speed hair dryers and cultivate a new growth curve
The 24Q1 company's revenue was -14.52% year-on-year, mainly due to increased operating pressure under K-type consumption. The company accelerated the layout of a high-speed hair dryer circuit and released a 199 yuan high-speed hair dryer in February of this year. According to Aowei Cloud Network monitoring, online retail sales of 24Q1 high-speed hair dryers were +12.72% year-on-year, and online retail sales were +15.96% year-on-year. As the share of revenue from high-speed hair dryers increases, we anticipate a marginal improvement in the company's operations in the second half of this year.
Increasing costs to promote high-speed hair dryers puts pressure on short-term profits
24Q1's gross margin was 57.1%, +1.02pct year on year, mainly due to product structure optimization; sales expenses ratio was 33.61%, an increase of nearly 9 pct year over year, mainly due to speeding up the promotion of new products, especially high-speed hair dryers. In 24Q1, the company's management R&D expenses rate was 5.21%, an increase of nearly 1 pct over the previous year. In the end, the company's net profit margin was 15.33%, -7.98pct year-on-year.
Deepen multi-brand strategies and respond positively to the external consumer environment
In order to cope with the K-type consumer environment, while further promoting the Feike brand to become younger and more high-end, the company promoted the sub-brand “vPro” to take on part of the original cost-effective market of the “Feike” brand in an orderly manner, and adjusted the marketing strategies and marketing channels of the two. In 2023, vPro achieved revenue of 869 million yuan, +115.48% year over year, increasing its revenue share to 17.17%, +8.44pct year on year. Improved brand positioning promoted the continuous optimization of the company's product structure. In 2023, the company's high-end product sales accounted for 50.95%, +5.73 pct compared to the previous year.
Risk warning: increased market competition; unfavorable price fluctuations for raw materials, etc.; risk of new products falling short of expectations