Incidents:

Qianjiang Motorcycle announced its three-quarter report on October 28, 2024: in the first three quarters of 2024, the company achieved total revenue of 4.924 billion yuan, an increase of 20.14%; total profit reached 0.497 billion yuan, an increase of 10.18% year on year; realized net profit of 0.467 billion yuan, up 13.82% year on year.

Investment highlights:

Revenue and net profit not attributable to mother increased, and gross margin and net profit margins declined marginally

In Q3 2024, the company achieved operating income of 1.664 billion yuan, +38.45%; net profit to mother was 0.118 billion yuan, -9.20%; net profit after deducting non-return to mother was 0.119 billion yuan, +77.62% year-on-year, achieving a high increase; gross profit margin 25.18%, -2.81 pcts year on year, -3.98 pcts month on month; net profit margin was 6.79%, -3.93 pcts year on year, -4.23 pcts month on month. Both gross margin and net interest rate declined.

Iteration of two-wheeler products, new four-wheeler plans

The company has successively launched the V-cylinder Flash 250 product and the Race 600RS version, and the Race 600 ranked high in the popularity index of the motorcycle professional app “Moto Fan” and was widely recognized. The company plans to launch all-terrain vehicle ATV and UTV products at the Milan exhibition in November 2024 to complete and enrich the all-terrain vehicle product line.

Profit forecasts and investment ratings

We forecast that the company's revenue for 2024-2026 will be 6.056/7.282/8.615 billion yuan, respectively, +18.79%/+20.24%/+18.31%; due to a month-on-month decline in Q3 gross margin in 2024, our net profit for the revised mother will be 0.552/0.699/0.849 billion yuan, respectively, +18.99%/+26.65%/+21.41%; corresponding PE is 16.62/13.12/10.81X, respectively. The company's motorcycle business is growing steadily, and all-terrain vehicles are being deployed at the same time. We are optimistic about the company's future performance development and maintain a “buy” rating.

Risk warning

New product promotion falls short of expectations, downstream demand falls short of expectations, industry competition intensifies risks, overseas market expansion falls short of expectations, and the risk of exchange rate fluctuations.