Incident Overview

The company released its 2024 mid-year report. In 2024H1, the company achieved revenue of 10.591 billion yuan, +3.66% year over year; net profit to mother of 0.951 billion yuan, +6.24% year over year; and deducted non-net profit of 0.893 billion yuan to mother, +7.16% year over year. Looking at a single quarter, 2024Q2 achieved revenue of 5.637 billion yuan, +18.07%; net profit to mother of 0.467 billion yuan, +12.06% year over year; and deducted non-net profit of 0.443 billion yuan, +21.38% year over year.

Analytical judgment:

Revenue growth exceeded expectations, and ASP is expected to increase year over year

The company achieved revenue of 5.637 billion yuan in 2024Q2, an increase of 18.07% year-on-year. Looking at volume and price breakdown: In terms of sales, we judge that 2024Q2 sales increased year-on-year under the low base effect; in terms of ASP, based on 2024Q2's better competitive environment in the industry and optimization of the company's product structure, we expect 2024Q2ASP to increase year-on-year.

Smooth structural adjustments, year-on-year increase in profits

In terms of profitability, the company's 2024Q2 gross profit margin was 17.64% (+2.34pct), which is an increase in gross margin due to smooth product restructuring as industry price competition slows down. The period rate is 8.76% (+2.78pct), of which the sales rate is 4.18% (+0.93pct) (due to the expansion of the sales team and increased investment in marketing); the management rate is 2.83% (0.63pct) (due to an increase in the number of subsidiary entities controlled by the company and a year-on-year increase in employee remuneration); financial rate -1.25% (+0.86pct) (year-on-year decrease in financial income and deposit interest); R&D rate 3.01% (+0.35pct) (due to an increase in the number of new products developed). Combined net profit margin 8.42% (-0.32pct).

Investment advice

As a leading enterprise in the electric two-wheeler industry, the company's product strength, channel power, brand power, technological strength, productivity and operation power jointly drive the company's operating results to continue to rise. Considering the amortization of equity incentive expenses, the revenue side maintains the previous profit forecast and estimates that the company's 2024-2026 revenue will be 24.854/28.848/33.427 billion yuan, respectively. The profit side adjusted profit forecast estimates that the company's net profit for 2024-2026 will be 2.108/2.531/3.267 billion yuan, respectively (previous value was 2.258/2.727/3.276 billion yuan), and EPS was 2.45/2.94/3.79 billion yuan, respectively ( (The previous value was 2.62/3.16/3.80 yuan), corresponding to the closing price of 26.32 yuan on August 22, 2024. PE was 10.76/8.96/6.94 times, respectively, maintaining the “buy” rating.

Risk warning

Relevant policies fell short of expectations, industry competition intensified, and terminal demand declined sharply.