Key points of investment
Key points of the announcement: Emma Technology achieved revenue of 3,581 billion yuan in 2023Q4, +0.18%/-50.54%, respectively; realized net profit to mother of 324 million yuan, or -34.89%/-51.18%, respectively. For the full year of 2023, the company achieved operating income of 21.036 billion yuan, +1.12% year on year; net profit attributable to mother was 1,881 billion yuan for the whole year, +0.41% year over year.
The year-on-year high base had a significant impact on Q4 performance, and the year-on-month increase in the Q4 cost ratio had a significant impact on Q4 results.
1) Revenue side: Q4 Company's revenue in a single quarter increased slightly year-on-year, and the off-season affected -50.5% month-on-month. Looking at the whole year, the company's overall sales volume remained stable under the pressure of the industry's price war, with a total sales of 10.7415 million units, -0.29% year over year, of which: electric bicycle sales volume was 7.613 million units, +5.06% year over year; electric two-wheeled motorcycle sales volume was 2.687 million units, +63.24% year on year; electric tricycles sold 426,700 units, +63.24% year on year. The electric tricycle market was in strong demand and sales volume was good; in addition, the company's acquisition of Green New Energy led to a significant increase in total production and sales of other short travel transportation products during the reporting period. Due to increased competition at the ASP level, the ASP for electric two-wheelers in 2023 was slightly -1% year-on-year. Other products maintained an upward trend in ASP. The company's comprehensive ASP in 2023 was 1,958 yuan, +1.42% over the same period last year. 2) Cost side: The Q4 company's gross margin in a single quarter was 19.95%, -1.49/+3.82pct, respectively. 2) Expense side: The cost rate increased year-on-month during the Q4 period. Q4 Sales Expense Rate/Management Expense Rate/R&D Expense Ratio for a single quarter were 4.13%/3.21%/4.86%, respectively, +0.97/-0.01/+1.17pct year-on-year, and +1.41/+1.28/+2.51pct, respectively. 3) Net profit side: Q4 achieved net profit of 324 million yuan, which was -34.89%/-51.18%, respectively, with a net sales margin of 9.25%, and -4.69/+0.05pct, respectively. The overall performance was in line with expectations.
Profit forecast and investment rating: Due to increased competition in the industry, we lowered the company's net profit forecast for 2024-2025 to 22.19/2,718 billion yuan (originally 25.85/3.179 billion yuan). We forecast the company's net profit to the mother in 2026 will be 3.255 billion yuan, corresponding to PE 13/11/9 times. The company takes “technology and fashion” as its brand proposition in terms of products, and continues to promote technology research and development such as motors, controllers, batteries, and new material applications to provide a solid foundation for product quality upgrades. At the channel level, companies continue to promote channel expansion and implement channel sinking strategies; use digital intelligence systems to improve store operation efficiency and strengthen refined management; actively promote international channel construction, and promote channel expansion in North America, South America and other countries. Under product upgrade optimization+refined channel management, we still maintain the company's “buy” rating.
Risk warning: The total growth of the industry falls short of expectations; the price war situation in the industry exceeds expectations