Introduction to this report:
The performance is in line with expectations. The promotion of the store-to-store model deepens brand perception barriers and drives the valuation center upward.
Key points of investment:
The performance was in line with expectations, and the “gain” rating was maintained. The company's 24Q1 performance is in line with expectations, and we maintain profit expectations. We expect the company's 2024-2026 EPS to be 3.75/4.49/5.54 yuan. Referring to the industry valuation level and considering the company's accelerated OBM business expansion, the company will be given 22.0xPE in 2024, maintain a target price of 82.40 yuan, and maintain a “gain” rating.
Q1 Revenue was in line with expectations, and customer expansion accelerated. High revenue growth continued in 24Q1, which was basically in line with expectations. The company received 24 new customers in a single quarter, all retailers, and 2 were in the top 100 in the US (23 with 34 customers for the whole year). Product strength and brand strength supported customer expansion. In terms of the new series, by the end of March '24, the company had received orders from 45 customers worth tens of millions of dollars for MotoLiving.
Product structure optimization combined with exchange rate and gross margin to support profit exceeding expectations. 24Q1 gross margin/net profit margin of 33.3%/20.2%, +3.3pct/+5.7pct year-on-year. The increase in gross margin is due to the introduction of new products to the market, product structure improvements, and exchange rate contributions. The increase in net interest rate is the financial expense ratio of 3.53 pct, the appreciation of the US dollar and the increase in exchange earnings. In addition, 24Q1 shares paid a total of 6.275 million yuan, affecting the profit margin by about 1.1 pct.
We are ready to go, and the brand can be expected to grow. In-store 24Q1 launched comprehensive promotion, targeting LA-zBoy, highlighting the comprehensive advantages of the product, and sufficient resilience in demand. The 24-year focus was on Runtong Single Store Model+ Model Replication. The model helped upgrade ingenuity from an industry brand to a consumer brand.
Risk warning: Prices of raw materials continue to rise, downstream consumer demand falls short of expectations, etc.