Core views

The company's operations continued to improve in the first quarter of 2024. Revenue resumed year-on-year double-digit growth for two consecutive quarters, and all four major business segments achieved growth in the first quarter. The inventory situation in the industry has improved markedly. With the gradual recovery of the economy and the gradual reflection of the company's overseas production capacity advantages, the company's operations are expected to continue to maintain a positive trend. With the continuous enrichment of the product matrix and the strengthening of the competitiveness of superior products, the company continues to have a lot of room to improve its market share in the fields of home appliances, tools, and new energy sources. At the same time, the company is actively developing new fields such as AI and robotics, which is expected to drive new growth in the future. Through continuous product innovation, cost reduction and efficiency, etc., the company's profitability is expected to increase further in the future.

occurrences

The company released its 2024 quarterly report. In the first quarter of 2024, the company achieved revenue of 2,318 billion yuan, an increase of 16.20% over the previous year, and realized net profit of 176 million yuan, an increase of 82.29% over the previous year.

Brief review

1. Revenue resumed year-on-year double-digit growth for two consecutive quarters.

The company released its 2024 quarterly report. In the first quarter of 2024, the company achieved revenue of 2,318 billion yuan, an increase of 16.20% over the previous year, and realized net profit of 176 million yuan, an increase of 82.29% over the previous year; deducted non-net profit of 169 million yuan, an increase of 85.48% over the previous year.

As industry inventories returned to normal levels and downstream customer demand gradually recovered, the company's operations continued to improve, and revenue continued to recover double-digit year-on-year growth for two quarters. The four major sectors of home appliances, tools, new energy, and industry all achieved year-on-year growth. Among them, in the home appliance sector, the company focuses on developing advantageous categories to increase its share, and is expanding market applications such as clean appliances, temperature control, and business scenarios to achieve qualitative growth. In the new energy sector, the company's control and power products are gradually being introduced to the market, and the growth rate is the fastest.

2. The overall operation is steady, gross margin has been further increased, and investment has been moderately increased to generate energy.

In the first quarter of 2024, the company's comprehensive gross profit margin was 23.65%, up 1.77pct year-on-year, and 0.83pct month-on-month. It was mainly driven by the company's self-controlled increase in new products and high-value categories, and the increase in shipments. At the same time, as high-priced inventory was gradually cleared and supply stabilized, the company's strategic measures to reduce costs and increase efficiency were effectively promoted.

In the first quarter of 2024, the company's three expenses (sales, management, R&D) totaled 349 million yuan, an increase of 19.41% over the previous year. The main reason was that in addition to consolidating the advantages of the home appliance and tool sector, the company increased investment in the new energy sector of the third growth curve, and accelerated the development of core technologies such as mobile robots, servo drives and control technology, and cultivating the fourth growth curve. Specifically, in the first quarter of 2024, the company's sales expenses were 81.05 million yuan, up 33.25% year on year, R&D expenses were 180 million yuan, up 32.14% year on year, and management expenses were 85.15 million yuan, down 8.52% year on year. In the first quarter of 2024, the company's financial expenses were 10.53 million yuan, a decrease of 57.07 million yuan compared to the first quarter of 2023, mainly driven by an increase in exchange earnings compared to the first quarter of 2023.

In the first quarter of 2024, the net cash flow from the company's operating activities was 99.47 million yuan, a year-on-year decrease of 43.37%. The company's repayment situation was good. The decline was mainly due to increased demand, increased cash payments for raw materials, and a year-on-year increase in salary payments to employees.

3. Profit prediction and investment advice.

The single-quarter results for the fourth quarter of 2023 showed a positive trend, and the company's operations continued to recover in the first quarter of 2024. The inventory situation in the industry has improved markedly. With the gradual recovery of the economy and the gradual reflection of the company's overseas production capacity advantages, the company's basic household appliances and tools are expected to resume good growth, and the new energy sector is expected to gradually recover with the company's rich product matrix and solutions. At the same time, the company actively lays out new fields such as AI and robotics, which is expected to drive new growth in the future. Driven by continuous product innovation, cost reduction and efficiency, etc., the company's gross margin has increased relatively well, and future profitability is expected to increase further.

We expect the company's revenue for 2024-2026 to be 10.76 billion yuan, 12.66 billion yuan, and 14.74 billion yuan, respectively, and net profit to mother will be 70 million yuan, 910 million yuan, and 1.15 billion yuan respectively. The corresponding PE is 18x, 14x, and 11x, respectively, maintaining a “buy” rating.

4. Risk warning: Changes in the macroeconomic environment affect consumer demand in the terminal market, the home appliance and power tool business falls short of expectations; market competition intensifies, affecting the company's supply share of major customers, or leading to a decline in the company's gross margin; declining competitiveness of major customers, affecting the company's related business growth; trade policy changes affecting the company's raw material supply and product delivery; chip shortage and price increases exceeding expectations, affecting the company's gross profit margin; sharp exchange rate fluctuations affect the company's gross margin and exchange profit and loss; the revenue growth rate of the new energy business falls short of expectations; the gross margin of the new energy business falls short of expectations; the gross margin of the new energy business falls short of expectations; the company's production efficiency Upgrades, supply chain optimization, and cost control fall short of expectations, etc.