Incident: The company released its 2024 quarterly report. In 2024Q1, it achieved revenue of 1.75 billion yuan, up 3.7% year on year; net profit to mother was 115 million yuan, up 10.5% year on year; net profit after deducting non-return to mother was 90 million yuan, up 28.8% year on year.

Large trucks maintained high growth, small trucks resumed growth, and the forklift sector led a steady increase in total revenue and a slight increase in gross margin. In the first quarter of 2024, domestic demand for forklifts was relatively stable, and overseas demand remained good. The company's large vehicles continued to grow at a high rate. Class 3 trucks and manual trucks improved significantly year-on-year. The entire forklift sector achieved high growth, driving steady growth in total revenue. 2024Q1, the company's comprehensive gross margin was 21.6%, an increase of 0.9 percentage points over the previous year, mainly due to the increase in the share of overseas revenue.

The expense ratio remained stable during the period, and the net interest rate followed the increase in gross margin. 2024Q1, the company's expense ratio was 14.4%, a year-on-year decrease of 0.5 percentage points, mainly due to a 0.8 percentage point year-on-year reduction in the financial expense ratio.

2024Q1, the company's net margin was 6.5%, an increase of 0.4 percentage points over the previous year, mainly due to an increase in gross margin.

Based on overseas markets, large trucks continue to grow rapidly, small cars resume growth, and the company's forklift sector has great potential for growth. The company's forklifts are mainly overseas markets, accounting for more than 75% of exports in 2023. The main markets are Europe and America, which have established mature channels and a certain level of brand awareness. In recent years, under the trend of the heavy truck lithium electrification industry, the company has established a large truck strategy in the forklift sector, focusing on expanding large lithium-electric forklifts. In 2023, sales increased by more than 60% year-on-year, and the 2024Q1 truck continued to grow at a high rate. Since 2024Q1, as European and American car inventories have come to an end, demand for Class 3 vehicles and manual vehicles has clearly recovered. The export growth rate of the 2024Q1 and Class 3 car industry is close to 33%, and the decline in manual vehicles has clearly subsided.

Profit forecasting and investment advice. The company's net profit for 2024-2026 is estimated to be 550 million yuan, 6.6 million yuan, and 780 million yuan, respectively. The compound net profit growth rate for the next three years is 19%, maintaining a “buy” rating.

Risk warning: risk of macroeconomic fluctuations, risk of overseas market expansion falling short of expectations, risk of exchange rate fluctuations.