Key points of investment:
Incident: The company released an annual report and quarterly report, achieving operating income of 2.01 billion yuan, a decrease of -15.6% in '23; net profit to mother of 110 million yuan, a decrease of 36.6%; net interest rate to mother of 5.3%, a decrease of 1.8 pct; net profit of 90 million yuan after deducting net profit of 40.8%; net interest rate without return to mother of 4.5%, a decrease of 2.0pct.
Looking at a single quarter, 23Q1-24Q1 achieved operating income of 4.9/5.5/5.2/4.5/5.3 billion yuan, a year-on-year change of -37%/-6%/+1%/-10%/+9%; net profit to mother of 0.1/0.4/0.1/0.2 billion yuan, a year-on-year change of -67%/-34%/-19%/-23%/+55%; net profit ratio of 2.9%/7.1%/8.3%/2.4%/4.1%, year-on-year change -2.6pct/-3.0pct/-2.0pct/- 0.4pct/+1.2pct
The consolidated gross margin in '23 was 15.0%, an increase of 1.5pct. The cost rate for the period was 9.4%, a year-on-year change of +3.4pct. Among them, the sales/management/R&D/finance cost rates were 7.3%/1.6%/1.4%/-1.0%, respectively, with a year-on-year change of +0.7pct/+0.3pct/+0.5pct/+1.8pct. The 24Q1 consolidated gross margin was 12.8%, up 0.1 pct. The cost rate for the period was 7.0%, a decrease of 2.3 pct. Among them, the sales/management/R&D/finance cost rates were 5.9%/1.4%/1.2%/-1.4%, respectively, with year-on-year changes of -0.01pct/-0.05pct/-0.06pct/-2.3pct. The increase in financial expenses is mainly due to a decrease in exchange earnings compared to last year due to the decline in the exchange rate of RMB against the US dollar.
By product, adult bicycle/children's bicycle/motorcycle/accessories/other products achieved operating income of 3.3/3.8/3.3/0.2/6.2/320 million yuan respectively, accounting for 16.5%/19.2%/16.3%/1.1%/31.1%/15.8%, year-on-year change of -41.6%/-6.9%/-29.4%/+96.4%/-22.6%/+177.0%.
By sales model, OBM/ODM/OEM/trade model revenue in 23 was 4.3/8.0/0.1/77 billion yuan respectively, a year-on-year change of +3.8%/-34.7%/+62.8%/+4.9%. By region, overseas/domestic revenue in '23 was 1,97/0.4 billion yuan respectively, a year-on-year change of -14.8%/-43.4%. The reason for the decline in revenue in the current period was mainly due to weak demand in overseas markets and a simultaneous decline in operating costs.
Profit forecast and rating: We expect the company's net profit for 24-25 to be 1.5/190 million yuan, a year-on-year change of +37.6%/+27.8%, and the current closing price corresponding to PE is 18.99/14.84 times, respectively. Referring to comparable companies, a PE valuation of 21-23 times over 24 years was given. The corresponding reasonable value range was 13.19 -14.45 yuan, giving a “superior to the market” rating.
Risk warning: shipping risk, international trade risk, market competition risk, supply chain mismanagement risk, exchange rate fluctuation.