Incident: The company released its 2024 quarterly report. In 2024, Q1 achieved revenue of 1.84 billion yuan, an increase of 58.7% over the previous year; achieved net profit of 400 million yuan, an increase of 95.2% over the previous year; and realized deducted non-net profit of 340 million yuan, an increase of 110% over the previous year.

Domestic sales of new products are expected to be concentrated in Q2, and both volume and price are expected to increase. The company released the new product P10S in February 2024, and pre-sale of new V series and G series products was launched on March 29. Pre-sale revenue for new V series and G series products was not confirmed to be included in 2024 Q1 revenue, and is expected to be released centrally in Q2 2024.

In addition, the price of new P series products has increased compared to old products, and it is expected to bring about both volume and price increases when revenue is confirmed in Q2.

Overseas self-management is growing rapidly, and offline channels in North America are expected to expand stores. The company has achieved good growth in Europe such as Germany, France, Italy, and the West through its own offline distribution channels and online self-operated layout; the North American region has maintained rapid growth, and the number of offline Target stores is expected to increase to more than 1,000 by 2024. With the launch of the US Amazon S8 series products on April 22 and the subsequent launch of new Q series products, the subsequent offline SKUs are also expected to be further enriched.

Channel adjustments drive product structure optimization and improve profitability. In terms of profitability, the company's gross margin increased 6.7pp to 56.5% year-on-year, mainly due to the increase in the share of overseas online business, and channel restructuring promoted product structure optimization. In terms of cost ratio, the company's sales/management/finance/R&D expenses were 20.8%/-0.8%/-0.8%/10.6%, respectively, -0.2 pp/ -1.7 pp/+1.1 pp/ -0.8 pp compared to the same period. Taken together, the company's net interest rate increased by 4.1pp to 21.7% year-on-year.

Profit forecasting and investment advice. With the continuous growth of the company's domestic and overseas markets, the company has become the number one selling robot in the world. Since 2023, the company has continued its high growth trend overseas, and has also achieved good growth domestically.

The company's 2024-2026 EPS is expected to be 19.75 yuan, 24.00 yuan, and 29.88 yuan respectively, maintaining a “buy” rating.

Risk warning: risks such as price fluctuations of major raw materials, increased market competition, and exchange rate fluctuations.