Event: The company released its 2023 annual report and 2024 quarterly report. In 2023, the company achieved revenue of 2,314 billion yuan, -28% year over year, net profit attributable to mother - 174 million yuan, -161% year over year, and realized net profit deducted from non-mother - 263 million yuan, or -197% year on year. Gross profit margin of 39.7%, year-on-year -4.6pct, net sales margin -7.5%, year-on-year -16.5pct. 2024Q1 achieved revenue of 582 million yuan, +30%/-21% of the same period; realized net profit of 0.29 million yuan, reversing losses from month to month; realized deducted non-net profit of 0.13 million yuan, reversing losses month-on-month; 24Q1 gross sales margin was 46.5%, +4.8/+7.6pct compared to the previous month; and a net sales profit margin of 4.98%, +11.6/+20.2 pct.

High-cost inventory had a negative impact on results in '23, and gross margin recovered to a good level in 24Q1. Affected by global economic instability, consumption downturn, and increased industry competition, the portable energy storage products industry faced many challenges in 2023. The company's sales volume declined in major markets such as Europe and Japan, product transaction prices fell, and revenue declined. Affected by high-cost inventory in '22, the company stepped up product promotion efforts in stages, and gross margin dropped 4.6 pct year-on-year in '23. 24Q1 With the optimization of inventory costs, the decline in raw material prices, and the continuous advancement of cost reduction and efficiency measures, the company's gross margin rose sharply to a good level of 46.5%. With the deepening layout of the company's global online and offline channels, revenue grew rapidly. 24Q1's revenue in the US market was +37% year over year, and the Japanese market was +75% year over year, further increasing the company's brand influence and market share.

Independent websites and offline KA channels continue to expand, and household energy storage opens up room for growth. 24Q1 has established 21 independent official websites around the world, covering 40 countries and regions. At the same time, in close cooperation with well-known global brands or retailers, the company's products have successfully entered nearly 10,000 world-renowned retail channels such as Costco, Harbor FreightTools, and Walmart. In terms of household energy storage, the company launched Geneverse electric treasury products. Among them, fixed home storage is already on the market in the US, and DIY household energy storage is expected to be launched in Europe in '24. The vast home energy storage space opens up room for the company to grow.

Investment advice: Considering the company's new product layout and new channel expansion, we expect the company to achieve net profit of 1.61/3.25/ 434 billion yuan in 2024-2026, +192.5%/+102.2%/+33.7% over the same period last year, corresponding EPS of 1.29/2.60/3.48 yuan, maintaining a “buy” rating.

Risk warning: downstream demand falls short of expectations; channel expansion falls short of expectations; industry competition intensifies.