Core views:

The company's 24Q1 revenue and net profit before and after deduction were +35.2%, +174.0%, and +225.9%, respectively. The company released its quarterly report for the year 24, and achieved revenue of 18.98 billion yuan in 24Q1, +35.2% year over year and +20.3% month over month. According to the Production and Sales Express, the company's 24Q1 wholesale sales volume was 78,000 vehicles, +34.2% year over year and +42.4% month over month. The year-on-year trend of the company's revenue is consistent with sales volume. In 24Q1, the company achieved net profit of 170 million yuan and 100 million yuan before and after deduction, respectively, +174.0% and +225.9%, respectively, and -51.7% and +161.5% month-on-month, respectively. 24Q1 The company's net profit performance compared to the same period last month was significantly better than revenue and sales, or mainly due to the narrowing of promotions due to inventory removal, improvements in company management and operating leverage.

The company's 24Q1 gross profit margin and net profit margin were +0.2pct and +0.5pct, respectively. 24Q1 gross profit margin and net margin were 6.3% and 0.9%, respectively, +0.2pct and +0.5pct, respectively, and -4.4pct and -1.3pct month-on-month, respectively. The 24Q1 labor cost was 1.37 billion yuan, +13.9% year over month, -14.9% month on month; labor cost ratio was 7.2%, -1.3 pct year on year, -3.0 pct month on month. The cost rate for the 24Q1 period was 6.1%, -1.5pct year-on-month, and -6.0pct, and sales, management, R&D, and finance expenses were 2.3%, 2.0%, 2.9%, and -1.1%, respectively, -0.2pct, -0.8pct, -0.7pct, and +0.3pct, respectively, -0.6pct, -2.1pct, -3.9pct, +0.5pct month-on-month, respectively.

Profit forecast and investment advice: The truck industry is in the second year of a 3-5 year upward cycle. Currently, domestic sales are recovering moderately, and overseas exports are growing steadily. Simultaneous improvements in the external environment and internal governance, and growth in export business are expected to help the company gradually reach a new level in the next few years. We expect the company's 24-26 EPS to be 0.23/0.32/0.44 yuan/share and net assets to be 254.7/268.3/28.73 billion yuan. Since the company's inventory removal will have a delayed impact on profit improvement, we use the PB valuation method and refer to the valuation level of domestic and international comparable companies. Considering that the premium in export business after the company establishes a new international trade limited company will also be included in the listed company, we give the company a 24-year PB valuation of 2.2 times, corresponding to a reasonable value of 12.08 yuan/share, maintaining a “buy” rating.

Risk warning: Industry prosperity is declining; raw material prices are rising; industry competition is intensifying.