Incident: The company released its 2023 annual report and 2024 quarterly report. In 2023, the company achieved revenue of 2.69 billion yuan, a year-on-year decrease of 1.9%; realized net profit of 260 million yuan, a year-on-year decrease of 24.7%; and realized deducted non-net profit of 250 million yuan, a year-on-year decrease of 25.7%. Looking at a single quarter, Q4 achieved revenue of 790 million yuan, a year-on-year increase of 5.7%; realized net profit of 0.7 billion yuan, a year-on-year decrease of 9.5%; and realized net profit of 70 million yuan after deduction, a decrease of 10% over the previous year. In 2023, the company's cash dividend was 170 million yuan, and the performance dividend rate reached 64.2%. In 2024, Q1 achieved revenue of 430 million yuan, an increase of 1.9% year on year; realized net profit of 50 million yuan, an increase of 94.7% year on year; realized deducted non-net profit of 50 million yuan, an increase of 107.8% year on year.

Revenue from the home appliance business was under pressure, and the energy storage business increased revenue. By product, the company achieved revenue of 1.42 billion yuan/73 million yuan/0.2 billion yuan/190 million yuan/290 million yuan/120 million yuan/120 million yuan/120 million yuan/120 million yuan, respectively, of -17.9%/-9.5%/-49.7%/+25.6% /-/ +70%, of which energy storage products were mainly due to the company's acquisition of Ningbo Yongneng New Energy Technology Co., Ltd. At a regional level, export/domestic sales achieved revenue of 1.94 billion yuan/700 million yuan respectively, -15.4%/76.1% year-on-year, respectively. The driving force for domestic revenue growth was mainly due to increased sales of domestic energy storage products.

The gross margin remained stable, and the cost ratio dragged down profitability. The company's gross margin increased by 0.1pp to 20.2% year over year in 2023. Among them, wireless vacuum cleaners/wired vacuum cleaners/motors/vacuum cleaners/energy storage products/accessories and other gross margins were 20.4%/21.1%/28.5%/19.3%/10.3%/32.6%, respectively, +2 pp/ -0.5 pp/ +6.5 pp/ -8pp/ -/ +6.5pp. In terms of cost ratio, the company's sales/management/finance/R&D expenses rate in 2023 was 0.5%/3.7%/-1%/3.8%, respectively, +0.1pp/+0.1pp, respectively; in terms of net interest rates, the company's net interest rate decreased by 2.8 pp to 9.9% year on year in 2023, and profitability declined.

24Q1 reduced costs and increased efficiency, and profitability improved year-on-year. The company's Q1 gross margin increased by 3.5pp to 20.5% year-on-year in 2024. In terms of cost ratio, the company's sales/management/finance/R&D expenses rate in Q1 2024 was 0.8%/5.4%/-2.5%/5.3%, respectively, compared with +0.3 pp/+1.6 pp/ -1.6 pp/ -4.2 pp/+1.6 pp, respectively. The financial expenses ratio decreased significantly. Looking at net interest rates, the company's net interest rate increased 5.3pp to 11.4% year-on-year in Q1 in 2024.

Profit forecasting and investment advice. Customer demand in the company's home appliance business picked up in 2024, while actively expanding the energy storage industry and improving product profitability. The company's 2024-2026 EPS is expected to be 0.6 yuan, 0.7 yuan, and 0.79 yuan respectively, maintaining the “hold” rating.

Risk warning: Risks such as fluctuations in raw material costs, exchange rate fluctuations, and new business expansion falling short of expectations.