Core views
The company released its 2024 quarterly report. 24Q1 achieved operating income of 293 million yuan, a year-on-year increase of 28.59%, and 24Q1 achieved net profit attributable to the parent company of 0.16 million yuan, reversal of losses over the previous year. Net profit attributable to the parent company after deducting non-recurring profit and loss was reversed year on year. During the same period, it achieved a gross profit margin of 62.78%, an increase of 3.72 pcts year-on-year, achieving a net profit margin of 5.32% and a year-on-year increase of 6.49 pcts. Thanks to the continuous adjustment of online channel fee investment strategies such as Douyin and the continuous cost reduction in its own supply chain, the company's overall profitability gradually showed an inflection point, showing a trend of continuous improvement.
occurrences
The company released its 2024 quarterly report.
24Q1 achieved operating income of 293 million yuan, a year-on-year increase of 28.59%, achieved net profit of 16 million yuan belonging to shareholders of the parent company, reversed losses year-on-year, achieved net profit of 0.16 million yuan after deducting non-recurring profit and loss, and realized year-on-year loss of 0.16 million yuan.
From a profit perspective, the company achieved a gross profit margin of 62.78% in 24Q1, an increase of 3.72 pcts over the previous year, a net profit margin of 5.32%, and an increase of 6.49 pcts over the previous year.
Brief review
I. Revenue level: new products continue to drive growth
The company's 24Q1 revenue increased 28.59% year over year. Overall, revenue continued the high trend since 23Q2, but as the base gradually increased, the growth rate slowed down from month to month. Decomposition and growth are expected to be mainly driven by new popular head, shoulder, and neck products released in 23 years.
II. Profitability
From the perspective of gross margin, the company's 24Q1 gross profit margin was 62.78%, an increase of 3.72 pcts over the previous year. The overall increase was significant. Analyzing the reasons, it is estimated that two factors are mainly affected: 1) the share of high-margin high-margin new products was higher overall compared to the first quarter of last year, which helped improve the company's profitability to a certain extent; 2) the continued effectiveness of the supply chain in reducing costs.
From the perspective of cost ratio, 24Q1 company's sales/management/R&D expense ratio was -2.31%/+1.54%/-0.23%, respectively. The sales expense ratio pressure drop was obvious. It is expected that the company's marketing strategy around the Douyin channel will continue to be adjusted, and the marketing ROI will increase.
From the perspective of net profit, the 24Q1 company achieved net profit of 16 million yuan, reversing losses over the previous year, with a net interest rate of 5.32%, an increase of 6.49 pcts over the previous year, a year-on-year increase of 6.49 pcts, after deducting a non-net interest rate of 5.32%, and an increase of 6.12 pcts over the previous year. The overall net profit of the company improved significantly due to multiple factors such as improved product structure, reduced supply chain costs, and increased ROI of expenses.
Investment advice: We expect the company to achieve operating income of 15.43 billion yuan, 17.89 billion yuan, and 2,040 billion yuan respectively in 24-26, up 21%, 16%, and 14% year on year; net profit attributable to the parent company of 0.67, 0.89, and 122 million yuan respectively, up 231.06%, 33.61%, and 37.36% year-on-year respectively. We are optimistic about the profit improvement trends brought about by the company's supply chain cost reduction, refined cost investment, and product promotion, and maintain the purchase rating.
Risk warning:
1) Risk of increased competition in the industry: In recent years, China's smart portable massager industry has been in a stage of rapid growth, but industry competition is also becoming more and more intense.
On the one hand, competition for the market has intensified among existing large companies, which is reflected in seizing the market by continuously improving product performance and ensuring service coverage; on the other hand, small and medium-sized companies continue to pour into the market, hoping to gain a certain share of the market. In order to cope with the risk of increased competition in the industry, the company's competitors are investing more in product research and development and market expansion, and are actively seeking new profit models and profit growth points.
If the company cannot adapt to the fierce competitive environment, cannot continue to maintain technological leadership, reduce the launch cycle of new products, and continue to launch high-quality products in a timely manner according to market demand, then the company risks falling in product prices, slowing revenue growth, and declining market share, which in turn will adversely affect business performance.
2) Macro environmental risk: The company's main business is the design, development, production, sales and service of smart portable massagers. The sales situation of the main product, smart portable massagers, is closely related to residents' disposable income and healthy consumption concepts. The rise in residents' disposable income and the upgrading of consumption attitudes are conducive to the future development of the company's industry, while residents' disposable income and consumption attitudes are greatly influenced by macroeconomic policies and the economic operating cycle. In the future, if there are major changes in the country's macroeconomic environment or macroeconomic fluctuations, and the company fails to adjust its business strategy in response to the resulting fluctuations in industry demand, it may cause fluctuations in the company's business performance.
3) Risk of fluctuations in gross margin: The gross margin of the company's main business decreases, which is mainly affected by factors such as product sales prices, raw material prices, labor costs, product structure, and changes in the industry environment, but the gross margin of the main business is still high. If future industry competition intensifies and product sales prices fall; raw material prices rise, and the company fails to effectively control product costs; and the company fails to launch new technology-leading products in a timely manner to effectively participate in market competition, there is a risk that the company's gross margin will decline and that it will not be able to maintain a high level, which will adversely affect the company's operating performance.