Core views

The company released its 2024 quarterly report. In 24Q1, it achieved revenue of 2,065 billion yuan, an increase of 9.15% over the previous year. Revenue performance slightly exceeded expectations. Looking at the breakdown, domestic sales performance is expected to be impressive, and the export sales side is relatively stable year on year. In 24Q1, net profit attributable to the parent company was 130 million yuan, up 7.06% year on year. Net profit attributable to the parent company after deducting non-recurring profit and loss was 125 million yuan, up 7.23% year on year. Gross profit margin was 26.92% over the same period, down 0.95 pct year on year, and achieved net interest rate of 6.32 pct, down 0.14 pct year on year. Profitability fluctuated in the short term, but remained generally stable.

occurrences

The company released its 2024 quarterly report.

24Q1 achieved operating income of 2,065 billion yuan, an increase of 9.15% over the previous year, and realized net profit attributable to shareholders of the parent company of 130 million yuan, an increase of 7.06% over the previous year, after deducting non-recurring profit and loss of 125 million yuan, an increase of 7.23% over the previous year.

From a profit perspective, the company achieved gross profit margin of 26.92% in 24Q1, a year-on-year decrease of 0.95pct, a net profit margin of 6.32%, and a year-on-year decrease of 0.14pct.

Brief review

1. Revenue level: Domestic sales performance exceeded expectations, and export sales were generally stable. The company's 24Q1 revenue achieved nearly double-digit year-on-year growth, slightly exceeding expectations overall.

Looking at the breakdown, the domestic sales side benefited from social e-commerce channels and revenue growth in some categories, and the overall performance was quite impressive. Looking at the export side, judging from the announcement already disclosed by the company, the sales amount of 24Q1 company's related transactions with JS and SN fell 10.3% year on year. Although the OEM business, which accounts for the main share, declined year on year, it is expected that revenue from other export businesses may increase to a certain extent under a low base. Overall, 24Q1 export revenue is expected to be basically stable year on year.

II. Profitability

From the perspective of gross margin, the company achieved a gross profit margin of 26.92% in 24Q1, a year-on-year decrease of 0.9 pct. Analyzing the reason, it is estimated that it is mainly due to the active business adjustment strategy adopted by the company to cope with the fiercely competitive market environment; from the perspective of cost ratio, 24Q1 company's sales/management/R&D/finance expense ratios were +0.72%/+0.22%/-0.64%, respectively. Among them, the year-on-year increase in sales expenses is mainly due to a marked increase in the share of high-cost social e-commerce channels, and the competitive environment in the market is clearly intense. The cost rate for R&D and management has remained stable. The year-on-year decline in the financial expense ratio is mainly related to a marked increase in interest income.

From a net profit perspective, 24Q1 achieved net profit of 130 million yuan, an increase of 7.06% over the previous year, and a net interest rate of 6.32%, which was basically stable over the previous year.

Investment advice: We expect the company to achieve operating income of 102.86, 111.09, and 11.998 billion yuan respectively in 24-26, with year-on-year increases of 7%, 8%, and 8%, respectively; net profit attributable to the parent company of 4.31, 4.69, and 517 million yuan, respectively, with a year-on-year increase of 10.86%, 8.67%, and 10.36%, respectively. As a leading domestic household appliance, the company's channel, brand, and manufacturing advantages are still obvious. The newly released zero-coating rice cookers and inverter wall breakers are expected to continue to drive the company's growth and maintain the purchase rating for 24 years.

Risk warning:

1) Risk of fluctuations in raw material prices: The raw materials purchased by the company mainly include iron, stainless steel, aluminum, copper, plastic, etc. The components purchased from abroad mainly include motors, panels, integrated circuits, etc. There are many types of raw materials and components required, and usage requirements are scattered. There is no situation where raw materials are too concentrated in a single variety or category. However, the increase in the price of these raw materials and the rise in logistics and packaging costs will have an impact on the company's profitability. The company will adopt scientific regulation of the supply chain network, optimize product design, integrate procurement of raw materials, comprehensively reduce production costs, and improve profitability.

2) Risk of increased competition in the industry: The market space for small household appliances in China is huge, and some new manufacturers are also trying to enter this field. As new competitors join, market competition will intensify, which may lead to a decline in the profit margin of the company's products. At the same time, there is unfair competition in the small household appliances industry, such as product imitation, patents, trademarks, or company names. Although the company ranks among the top in the domestic small kitchen appliance industry, with the development of the industry, the company faces the risk of increasing market competition, which may have a certain impact on the company's market size.

3) Risk that industry demand falls short of expectations: The economic growth rate has slowed in recent years, and uncertainty about residents' income has increased. Demand for categories other than rice cookers, wall breakers, and electric kettles may slow down, which may have a negative impact on the company's demand for related categories.