Description of the event
The company disclosed its quarterly report: in the first quarter of 2024, the company achieved operating income of 852 million yuan, a year-on-year decrease of 4.34%; realized net profit due to mother 115 million yuan, a year-on-year decrease of 1.67%; and realized net profit deducted from non-mother of 98 million yuan, a year-on-year decrease of 12.22%.
Incident comments
The company's revenue declined slightly due to the fall in orders during the phase, and there was a decline in operating efficiency. The company's revenue in the first quarter of 2024 fell 4.34% year on year, or mainly due to the slow recovery in domestic temperatures in the first quarter, and the pace of freezer orders was affected, causing overall freezer revenue to fall. Meanwhile, refrigerators are expected to experience rapid growth due to new customer expansion, and the impact of individual customer order fluctuations in supermarkets weakens and is expected to begin to grow. The company's gross margin for the first quarter of 2024 was 27.49%, a slight improvement of 0.36 percentage points over the same period last year, or benefited from the optimization of the company's supply chain system and an increase in the share of export sales. In terms of expense ratio, the company's sales expense ratio in the first quarter of 2024 increased 2.16 percentage points year on year, or mainly due to the expansion of the company's business, the number of sales staff increased and the level of sales staff remuneration increased accordingly. In addition, the management fee ratio increased 0.21 percentage points year on year, and the R&D expense ratio decreased 0.22 percentage points year on year, which combined the company's operating profit for the first quarter of 2024 (gross profit - taxes and additional - sales & management & R&D expenses plus asset and credit impairment losses ) The year-on-year decline was 22.2%, and on this basis, the company's financial expenses ratio was optimized by 1.06 percentage points year over year. In summary, the company's net profit margin for the first quarter of 2024 increased by 0.37 percentage points year on year, but considering the year-on-year increase of about 10.77 million yuan in government subsidies received by the company in the first quarter of 2024, the net profit margin after deducting non-return to mother decreased 1.03 percentage points year on year. In terms of operating efficiency, the company's inventory turnover days increased by 17.04% in the first quarter of 2024, the number of accounts receivable turnover days increased by 5.89%, and the number of accounts payable turnover days decreased slightly by 1.31% year on year. Combined, the company's net business cycle increased by 18.71% year on year, or was mainly affected by the pace of customer orders or repayments.
The company continues to refine technology while actively laying out overseas markets, and is optimistic that business performance will improve after demand recovers. The company adheres to the R&D concept guided by market demand, actively explores new demand trends, and carries out forward-looking research and development. The company's cold chain products have a large volume span, complete types and series, which can meet the differentiated and customized needs of customers in terms of different volumes, performance, display effects, and varying degrees of digitalization and intelligent upgrades. On this basis, the company actively promotes domestic and overseas market expansion: in terms of domestic sales, the company's commercial refrigerated display case market position remains stable, the commercial refrigerated display case customer structure continues to improve, product sales have achieved rapid growth, supermarket display cases have launched many new products, the market results are good, the commercial intelligent container product structure has been further improved, and the proportion of high-priced refrigerated products has increased; in export sales, with the company's deepening cooperation with international brands and going overseas with domestic customers, the global market share of the company's products is expected to continue to increase. Currently, the company's global market share is still low. There is plenty of room for growth in overseas markets. Overall, the company's underlying growth logic has not changed. After demand picks up, it is expected to reverse the decline with product advantages and deep customer accumulation, leading to an inflection point in business.
Investment advice: The company focuses on the field of commercial cold chain equipment, promotes product innovation to meet the needs of personalized market segments, and continues to increase its market share and brand influence. We expect the company's 2024-2026 net profit to be 4.74, 5.48, and 614 million yuan, respectively, corresponding to PE of 11.89, 10.28, and 9.17 times, respectively, to maintain a “buy” rating.
Risk warning
1. The risk that the company's product development does not match market demand in a timely manner; 2. The risk of fluctuating raw material prices.