Brief performance review

On August 15, 2024, the company disclosed its semi-annual report. In the first half of the year, it achieved revenue of 0.74 billion yuan, an increase of 55.2% year on year, and realized net profit to mother of 97.099 million yuan, an increase of 46.9% year on year.

Among them, Q2 achieved revenue of 0.41 billion yuan, an increase of 77.5% year on year, and realized net profit to mother of 54.316 million yuan, an increase of 15.0% year on year.

Management analysis

Downstream retailers continue to replenish stocks, and revenue continues to grow rapidly. The company achieved rapid revenue growth in the first half of the year and further accelerated in 24Q2. We expect to benefit mainly from: 1) North American retailers continue to replenish stocks, driving the company's order volume to pick up; 2) some new air compressors have begun to be released, further increasing the market share. By category, the revenue of wet and dry vacuum cleaners in the first half of the year was 0.38 billion yuan, +38.5% over the same period last year. The revenue of small air compressors was 0.25 billion yuan, +72.4% year over year.

Gross margin continued to rise, and profitability fluctuated due to exchange rates. 24Q2's gross margin was +4.6pct year-on-year to 33.3%. The increase in gross margin is expected to further upgrade the main product structure. The 24Q2 sales/management/finance/R&D expense ratio was 13.5%/3.1%/-1.8%/5.0%, compared to +1.8/-4.9pct/-20.4pct/ -1.2pct. The increase in financial expenses was mainly due to the scale effect of the decline in exchange profit and loss compared to the same period last year, and the decline in management and R&D expenses; under the combined influence, the company's 24Q2 net margin was 13.1%, -7.2pct year on month.

Profit Forecasts, Valuations, and Ratings

The company is expected to achieve net profit of 0.23/0.29/0.36 billion yuan in 2024-2026, +33.0%/+24.1%/+26.0% year-on-year. The company's current price corresponds to PE of 14.4/11.6/9.2x, maintaining a “buy” rating.

Risk warning

Risk of exchange rate fluctuations, main business recovery and new business growth falling short of expectations.