Core viewpoints
Event: the company announced the mid-year report of 22, 22H1 achieved revenue of 1.1 billion yuan, year-on-year + 20.9%; net profit of 70 million yuan, + 18.0%; gross profit margin of 16.5%, year-on-year-2.4 PCT; net profit rate of 6.8%, year-on-year-0.2pct.
The decline in overseas demand suppresses overall revenue growth, and the profit end of single Q2 is lower than expected. 22Q2 achieved revenue of 300 million yuan, year-on-year-17.9%, net profit of 14 million yuan, year-on-year-37.9%, gross profit of 13.2%, year-on-year-5.8pct, and net profit of 4.7%, year-on-year-1.5pct.
The company's 22Q2 profit performance is lower than expected, which we expect to be mainly due to: 1) a substantial increase in labor costs as a result of the increase in production capacity in North America; 2) increased promotion of independent brands; and 3) revenue recognition is mainly distributed from January to April, due to the failure to fully enjoy the dividend of exchange rate depreciation.
The growth rate of lawn mower is steady, and the growth momentum is still the same. 22H1 lawn mower achieved revenue of 970 million yuan, + 31.1% year-on-year; gross profit margin of 16.1%, year-on-year-1.0pct, in line with expectations.
The lawn mower / other power machinery / accessories respectively achieved an income of 0.1mower / other power machinery / accessories, with a year-on-year income of 0.1max / 0.6 billion, a year-on-year increase of-45.3% / 2.6% and a gross profit margin of + 6.9pct/-11.8pct/-3.5pct. We believe that with the improvement of downstream demand and the easing of inventory pressure on retailers, the company's multi-category revenue is expected to return to positive growth.
The core channel relationship is stable, riding lawn mower capacity is imminent, portable energy storage to expand revenue space.
The top five customers of 22H1 account for 75.6% of the revenue, compared with + 5.7% in 21 years, which is expected to be mainly due to the deep cooperation between the company and The Home Depot Inc and the substantial increase in channel revenue.
The company's riding lawn mower has been finalized production in June and began to ship in early July, and will enter the volume stage in the second half of the year. If all intentional contracts are landed, it is expected to bring income of more than 1.04 billion yuan, significantly thickening the company's performance; the company is currently actively arranging mobile energy storage, with strong downstream demand and strong cooperation with the main industry, with broad growth space.
Investment advice: the company as a leading domestic OPE supplier, capacity landing & stable channels, growth with certainty. We believe that the medium report results do not change the long-term logic, short-term bad fully hit the ground, is indeed an opportunity to increase holdings. Taking into account the performance of the company's interim report, we downgrade the company's profit forecast. It is estimated that the revenue for 2022-24 will be RMB 2.62 billion, with an increase of 25.4%, 32.5%, 22.5% and 32.5%, respectively. The net profit of the parent company will be RMB 2.1 million, and the same increase will be 111.6%, 80.1% and 45.3%, corresponding to PE 36X/20X/14X. Maintain the "overweight" rating.
Risk tips: shipments of riding lawnmowers fall short of expectations; cost-side improvements fall short of expectations; cooperation with core customers falls short of expectations; and the political situation changes more than expected.