Introduction to this report:
The company's performance was under pressure in the short term, domestic sales were relatively weak, and export sales continued to grow. Continued expansion of overseas operations has led to an increase in scale, and the company's profitability is expected to recover marginally in the future.
Key points of investment:
Investment advice: The company's performance is under pressure in the short term. Considering the uncertainty about the rate of subsequent cost reduction, we lowered our profit forecast. The 2024-2026 EPS is 2.99/3.77/4.64 yuan (original value was 3.28/4.59/5.93 yuan, down 9%/18%/22%), and the growth rate is +73%/+26%/+23%. Refer to comparable companies, give 35x PE in 2024, and raise the target price to 104.48 yuan (the reason for the increase in comparable company valuations) to maintain the “prudent increase” rating.
The company's performance is under pressure in the short term. The company achieved operating income of 825 million yuan in 2024Q1, -6.59% year-on-year, and net profit to mother of 014 million yuan, or -72.57% year-on-year.
Export sales continue to grow. Domestic sales are exchanged for price: we expect the company's domestic sales revenue to be about 570 million yuan, about -15% year over year, and export sales revenue of about 200 million yuan (independent brand+Aladdin), +10% year over year.
We expect the decline in domestic sales to be mainly due to a decline in the average price of products. The growth rate of China Gimi's own brand Q1 in export sales was close to 30% year-on-year, but Aladdin in the Japanese region caused a short-term drag due to channel restructuring. Looking ahead, the company will continue to expand more offline KA in Europe and the US, and the expansion of new channels is expected to drive large-scale overseas release.
The gross sales gap is under relative pressure, and subsequent profit is expected to improve: the company's 2024Q1 gross sales margin was 10.8pct, up 0.8 pct from 2023Q4, and 8.9pct lower than 2023Q1. The decline in the company's gross margin was mainly affected by the cost-effective Play3 product (1999 yuan). Since the gross margin of this product was far lower than the previous main sales product, and Play3 volume increased significantly, the company's overall gross margin declined.
The company launched a new generation of Play5 products on April 25. We expect this model to have a better cost reduction plan based on the previous one, and profit margins are expected to open up in the future.
Risk warning: There is uncertainty about the recovery of consumer demand, and market competition is intensifying