Description of the event

The company disclosed its quarterly report: In 2024 Q1, the company achieved operating income of 2,065 billion yuan, a year-on-year increase of 9.15%, achieved net profit of 130 million yuan, an increase of 7.06% over the previous year, and realized net profit of 125 million yuan without return to mother, an increase of 7.23% over the previous year.

Incident comments

Domestic sales grew significantly, export sales performance was stable, and the company's overall revenue grew by a high single digit. The company achieved revenue of 2,065 billion yuan in 2024Q1, an increase of 9.15% over the previous year. In terms of domestic sales, the soy milk machine category showed impressive year-on-year growth. According to Aowei Cloud's retail monitoring data, online sales of 2024 Q1 soy milk machine/wall breaker/rice cooker/electric pressure cooker changed by +30.82%/-13.32%/+5.3%/-3.95% year on year, respectively. Joyang brand sales reached 41.1%/40.5%/12.5%/9.6%, corresponding to the year-on-year change of +0.02/1.95/+0.24/-0.13pct. After adjustments, the marketing strategy is more refined, and the share of direct management is expected to grow close to double digits in 2024Q1; in terms of export sales, as of March 28, 2024, the company had sales related transactions totaling US$18.17 million with JS Global Life, SharkNinja and related companies. The figure is US$2.06 million. The figure is US$2.06 million. Considering the increase in the exchange rate of US dollar against RMB in Q4 compared to the same period, the company is expected to increase. Export sales revenue remained stable year over year in Q1 2024. On April 18, 2024, the company released the Space Technology 3.0 series, including the 2024 0-coated non-stick rice cooker 40N9U Pro, the Omnipotent Nutritionist Y8, and Joyang Space Heat Xiaojing R5P, which is expected to have a positive driving effect on the company's sales in the future.

Profitability is generally stable. In 2024, the company's gross margin reached 26.92%, down 0.95pct year on year. Domestic sales may benefit from the company's increased cost reduction capacity and product structure optimization. Gross margin increased, and export sales declined due to exchange rate disturbances. On the cost side, the company's sales, management and R&D expenses changed by +15.47%/+15.45%/+3.71%, respectively. The corresponding rates accounted for 13.23%/4.33%/4.25%, the year-on-year change of 0.73/0.23/ -0.22pct, and the year-on-year change in financial expenses was -0.64pct, mainly due to the increase in current interest income. In addition, the company's other revenue for the first quarter increased by 14.94 million yuan year-on-year, accounting for a year-on-year increase of 0.71 pct in revenue, mainly due to an increase in VAT deductions. Under the combined influence, the company's net interest rate to mother reached 6.29%, a slight decrease of 0.13pct from the previous year.

Operational efficiency has improved markedly, and the quality of operations has been steady. The company's inventory for the first quarter decreased by 22% year on year, and the number of inventory turnover days decreased sharply by 12.98 days year on year, leading to a year-on-year decrease of 8.39 days in the business cycle, notes receivable and accounts receivable falling 12.91% year on year, and operating efficiency improved markedly. In terms of cash flow, the company's operating cash flow in the first quarter increased slightly by 2.09% year on year. The revenue ratio (cash received from sales of goods and provision of services) reached 1.37, and the net present ratio (net cash flow from operating activities/net profit attributable to the owner of the parent company) reached 2.41, and the operating quality was steady.

Investment advice: The company is positioned as a high-quality small household appliance enterprise, actively embraces changes in demand and channels, and is good at developing products in a targeted manner, self-adjusting and participating in emerging channel systems, exploiting potential increases in consumer demand, and actively optimizing operational efficiency, which is expected to improve scale and efficiency. We expect the company's net profit to be 4.58, 5.13, and 568 million yuan respectively for 2024-2026, corresponding to PE valuations of 21.19, 18.93 and 17.08 times , maintaining a “buy” rating.

Risk warning

1. Macroeconomic fluctuations bring about the risk of weakening demand and causing the company's revenue to fall back; 2. Risk of declining scale and efficiency due to increased competition in the industry.