Brief performance review

On October 28, 2024, the company disclosed its three-quarter report. 24Q1-3 achieved revenue of 1.31 billion yuan, a year-on-year increase of 56.1%; realized net profit of 0.19 billion yuan, an increase of 48.0% year-on-year; and realized net profit of 0.18 billion yuan after deduction, an increase of 54.3% year-on-year. Among them, 24Q3 achieved revenue of 0.57 billion yuan, an increase of 57.4% year on year; realized net profit of 0.09 billion yuan, an increase of 49.2% year on year; realized net profit of 0.09 billion yuan after deduction, an increase of 54.1% year on year.

Management analysis

Downstream retailers continue to replenish stocks, and revenue continues to grow rapidly. The company's 24Q1-3 revenue has grown rapidly, and we expect the main benefits: 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.

Gross margin declined year over year, and profitability fluctuated. The 24Q3 company's gross margin was -5.5 pct to 33.0% year on year. It is expected that mainly due to exchange rate fluctuations combined with an increase in the share of air compressor revenue with relatively low gross margin. The 24Q3 sales/management/finance/R&D expense ratio was 9.1%/4.1%/2.0%, -0.6/-0.8pct/+0.3pct/-1.6pct. The increase in financial expenses was mainly due to the impact of exchange and the increase in short-term loans, and the decline in sales, management and R&D expenses was mainly due to scale effects; under the combined influence, the company's 24Q3 net interest rate was 15.4%, -0.9 pct year on year.

Profit Forecasts, Valuations, and Ratings

The company is expected to achieve net profit of 0.24/0.3/0.38 billion yuan in 2024-2026, +36.9%/+24.6%/+26.9% year-on-year, and the PE corresponding to the company's current price is 19.8/15.9/12.5x.

The company is currently in a period of rapid growth, binds to downstream core channels, actively develops new markets and categories, has a strong alpha, and maintains a “buy” rating.

Risk warning

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